Vulnerabilities of life in the cutting-edge world have made getting sufficient insurance cover crucial for each person. This is particularly significant for private-sector employees who are not able to enjoy social security benefits as enjoyed by public sector employees. To expand the advantages of life insurance to private area employees, government in the year 1976 introduced the Employees Deposit Linked Insurance Scheme (EDLI).

Employee Deposit Linked Insurance Scheme or EDLI is a type of insurance cover which is presented by the Employees Provident Fund Organization or EPFO for private sector salaried employees. The nominee gets lump sum payment in case of the demise of the individual insured, during the time of the tenure of service. Employee deposit linked insurance scheme is applicable on all the associations who are registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. All such associations should subscribe to this scheme and propose life insurance advantages to their employees. This scheme works in a mix with EPF and EPS. The degree of the advantage is chosen by the last drawn salary of the employee.

Characteristics of employee deposit linked scheme

EDLI is applicable to all employees with a basic salary under Rs. 15,000/ – each month. In the event that the basic salary goes above Rs. 15,000 every month, the most extreme advantage is capped at Rs. 6,00,000/ – . it is effective from 28.04.2021, the EPFO has expanded the most extreme advantage to Rs.7 lakh.

Employee contribution is only required for employee provident fund and there is no need for the employees to contribute to employee deposit linked scheme.

There is a bonus of Rs. 1, 50,000 which is available under the employee deposit linked scheme. The bonus has been increased from 28th April 2021 and now the bonus is Rs. 2.5 lakh.

The Ministry in February 2018 increased the minimum amount of benefit to Rs. 2.5 lakhs and its validity period was of two years. The Employee Provident Fund Organization or the EPFO  extended the minimum amount of benefit of Rs. 2.5 lakhs with retrospective effect from 15th February 2020.

Any organization that has 20 or more than 20 employees has to register for the employee provident fund. Hence any employee who has an employee provident fund account becomes eligible for an employee deposit linked scheme automatically.

No exceptions are available for the insurance coverage provided by the employee deposit-linked scheme. It protects the person who is insured all around the world.

Any employer who wants to opt for another group insurance scheme but the benefits which are to be offered must be equal or more than the benefits which are currently being offered under the employee deposit linked scheme.

According to the provisions prescribed under the employee deposit linked scheme, the contribution made by the employer must be 0.5% of the basic salary or a maximum of Rs. 75 per employee per month. If another group insurance scheme is not available the maximum contributions are capped at Rs. 15,000 per month.

For every calculation done under the employee deposit linked scheme dearness allowance must be added to the basic salary.

Calculation of employee deposit linked scheme

The nominee who is registered will receive a lump sum amount compensation in the event of the demise of the insured person. If there are no nominees or no beneficiary is registered then the legal heir will be entitled to the said amount.

The payout which is to be awarded will be calculated with the following method. This method has been in effect from 28th April 2021.

Average monthly salary of the employee for last 12 months ( capped at Rs. 15,000/- per month) multiplied by 30 plus bonus amount ( Rs . 2,50,000 /- )

Hence the maximum payout under the employee deposit linked scheme is capped at Rs. 7,00,000.

Documents required payout under employee deposit linked scheme

For processing the claim under the employee deposit linked scheme the below-mentioned documents need to be submitted by the claimant :

  • Duly completed Form 5 IF
  • Death certificate of the insured person
  • Succession certificate in case the claim is filed by the legal heir
  • A guardianship certificate is required if the claim is filed on behalf of a minor by an individual other than the natural guardian of the minor
  • A copy of the canceled cheque for the account in which the payment is to be received.

How to claim the benefits under employee deposit linked scheme

The process which is to be followed by the nominee or claimant who will the received amount under the employee deposit linked scheme is mentioned below :

  • The nominee can claim the benefits which is specified by the insured person. If there are no nominees then the family members or legal heirs can apply for this.
  • The deceased person must have been an active contributor to the employee provident scheme at the time of his / her death.
  • Employee deposit linked insurance form 5 IF has to be properly completed and has to be submitted the claimant.
  • The form of the claim has to be duly signed and certified by the employer.

If in any case there is no employer or due to any reason the signature of the employer cannot be obtained the form must be attested by any of the following :

  • Bank manager ( in whose branch the account was maintained)
  • A local member of parliament ( MP ) or member of legislative assembly ( MLA )
  • Gazetted officer
  • Magistrate
  • Member or chairman or secretary of the municipal board
  • Postmaster or sub-postmaster
  • Member of the regional committee of employee provident fund or central bureau of tax

The claimant must furnish all the necessary documents along with a duly completed form with the regional employee provident fund commissioner’s office for processing the claim.

The claimant can also furnish Form 20 ( for employee provident fund withdrawal claim ) as well as form 10 c /d for claiming all the benefits under the three schemes that are employee provident funds, employee pension scheme, employee deposit linked insurance.

Additional documents that are required should also be presented as soon as possible to process the claim

When all the documents which are required are presented and the claim is accepted then it is the duty of the employee provident fund commissioner that he shall accept the claim within 30 days from the receipt of the claim.

The contribution made by the employee and employer towards employee pension scheme, employee provident fund, and employee deposit linked insurance scheme.

Employer on behalf of employees makes a contribution towards the above-mentioned scheme. The contribution of the employee is deducted from the salary before the salary is credited. Employees don’t have to make any direct payments towards these schemes.

The contribution of the employees is calculated as given below :

  • For the employee provident fund, the contribution is 12%.
  • For employee pension scheme the contribution is none
  • For employee deposit linked insurance scheme it is none

The contribution of the employer is calculated in the following manner :

  • For employee provident fund it is 3.67%.
  • For the employee pension scheme, it is 8.33% or Rs.1,250.
  • For employee deposit linked insurance scheme it is 0.50 or a maximum of Rs.75.


The main intent behind the employee deposit-linked insurance scheme is to provide financial security to the family members of the policyholders who are a deceased person. Family members include unmarried daughter or son till 25 years of age or spouse. The employee does not have the discretion to choose which of the three schemes that are an employee pension scheme, employee provident fund or employee deposit linked insurance scheme he or she wants to opt for but the schemes are transferrable with jobs. The new employer shall continue to make payments in the existing account of the employee.

Also Read,

Ind AS 115: Revenue From Contracts With Customers
Form 38 – A mandatory document for trading