As part of a government program managed by the Employees' Provident Fund Organisation (EPFO), an insurance scheme is available that provides free life coverage up to 700,000 rupees to those who contribute to the PF. The employee does not need to make any additional payments.
EPFO provides this special service to its members under the Employees' Deposit Linked Insurance (EDLI) scheme. The main advantage of this program is that the employed person is not required to pay a premium; that is, they do not have to make any contributions.
The EDLI scheme was launched in 1976 to provide social security for PF account holders. No funds are deducted from the employee's salary to obtain this insurance coverage. The entire premium is covered by the employer. The company contributes 0.50% of the employee's basic salary plus Dearness Allowance (DA) to this insurance program.
In case of premature death of an EPFO member, the heir receives a lump sum payment of not less than 2.50 lakhs and not more than 7 lakhs. This form of assistance is available to an employee who has worked continuously for at least 12 months immediately before death. Even if the employee changed companies within these 12 months, they retain the right to receive this benefit. To receive this allowance, it is sufficient to keep the PF account active. This benefit is provided only if the death occurs during service or at the workplace.
If an EPFO member dies prematurely, their heir can apply for the specified amount. To do this, they must fill out Form 5 IF at the PF Commissioner's office and submit it. The application should be accompanied by the employee's death certificate, the certificate of inheritance, and bank account details.
EPFO advises all its members to complete the e-Nomination procedure through the UAN portal. Updating the heir's details eliminates any complications for the family when receiving the compensation amount in case of an unfortunate event, and also avoids the need to visit government offices.