EPFO: If you work somewhere private and PF is deducted from your salary, then this news is very important for you. Actually, Employees Provident Fund Organization (EPFO) gives free life insurance up to Rs 7 lakh to every member without any extra expense or premium. Generally employed people are not aware of this big benefit. The name of this government scheme is EDLI (Employees’ Deposit Linked Insurance). In case of any untoward incident or death of the employee during the job, this money is given directly to his family or nominee. For this, the employee does not need to fill any separate form or undergo medical test. As long as you are an active member of EPF, this protection cycle continues to work automatically.
How does this government insurance become active without premium?
The biggest feature of this insurance cover is that for this, not a single penny is deducted from the employee’s salary. This does not require any additional paperwork. As soon as an employee joins a company and his PF account is opened, he becomes entitled to this life insurance scheme. According to insurance experts, if an EPF member dies during service, this lump sum insurance amount is given to his nominee or legal heir. According to a report in Economic Times, as long as the employee’s PF account is active, this cover remains fully effective.
Where is the money deducted from salary deposited
To strengthen the social and financial security of employees, a special structure has been prepared by combining EPF, EPS and EDLI. Every month, the part deducted from the employee’s salary and the contribution given by the company is divided into three different funds in this way.
- EPF (Provident Fund): 12 percent of the employee’s basic salary is deposited in this. The company also gives the same amount, out of which 3.67 percent goes to this fund. Its main objective is to create large savings for post-retirement.
- EPS (Pension Scheme): In this pension fund, the employee does not have to pay anything from his own pocket. 8.33 percent (maximum Rs 1250) of the basic salary is transferred by the company so that regular monthly pension can be received in future.
- EDLI (Insurance Scheme): For this life insurance also the employee does not have to pay any amount. The company deposits 0.5 percent of your basic salary (maximum Rs 75) for this insurance protection.
Complete mathematics of insurance amount of Rs 7 lakh
The claim amount available under the EDLI scheme completely depends on the average salary of the employee in the last 12 months.
- Basic calculation: It is 35 times the average monthly salary of the employee for the last 12 months. The maximum salary limit for this calculation has been fixed at Rs 15,000. In this context, according to the basic calculation, a maximum of Rs 5.25 lakh is made.
- Bonus amount: It is 50 percent of the average PF balance of the last 12 months. Its maximum limit has been fixed at Rs 1.75 lakh.
By combining these two parts, a maximum of Rs 7 lakh can be paid to the nominee. In simple words, if the basic salary of an employee is Rs 15,000 or more and his PF balance is more than Rs 3.5 lakh, then his family can easily get a claim of the entire Rs 7 lakh.
Minimum security rule for families with low balance
In this government scheme, special care has been taken of the interests of the families of low-income or employees who have recently started jobs. As per general rules, the minimum EDLI benefit in this scheme is fixed at Rs 2.5 lakh. However, according to an important amendment made on July 18, 2025, if the average PF balance of a deceased member is found to be less than Rs 50,000, then the minimum benefit payable to his family will be Rs 50,000.
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