Factors on the basis of insurance cover is decided under EDLI policy
In the event of death while in service, the dependants get money from the cover. The benefit is provided under the Employees' Deposit Linked Insurance (EDLI) scheme. The sum assured value is computed or decided based on the average wage on a monthly basis and average balance in EPF account. And depending on the set criterion set for the two parameters, higher of the two value is taken to be the sum assured value subject to the cap of Rs. 1.3 lakh.
In respect of average monthly wage, average monthly wages multiplied 20 times (with Rs. 6500/ month being the threshold limit) during the one year period preceding death of the EPF account holder.
In respect of EPF balance account with the retirement body, the average balance in the account maintained in the prior 12 month period taken fully to the extent of Rs. 50,000. For the balance amount in excess of Rs. 50,000 an additional amount of 40% to the amount not in excess of Rs. 1,00,000.
So, in case your average wage amounts to Rs. 6500 per month, you'll be entitled to a cover of Rs. 1,30,000 else if the wage amounts to less than this Rs. 6500 threshold limit, you'll get less cover or a maximum of Rs. 1,00,000 considering average in the EPF balance account with allowed additions.
The cover is payable to the nominee of the EPF account holder in case of death of the person maintaining employee provident fund account.
Employers contribute for insurance provided to employee under EDLI scheme
Employers contribute for the insurance cover under the scheme and employee are no way liable to pay fir the cover. The limited insurance cover is provided to the employee funded by the employer who contributes 0.5% of basic salary and dearness allowance on a monthly basis towards the account.
Employers replace insurance cover granted under EDLI Scheme with a better Group Insurance cover
With flexibility available to employers to stick with the terms of the EDLI scheme or subscribe to some other group insurance for the employee provided the other policy offers higher benefits in its comparison. Employers seeking the limited benefits of EDLI scheme often replace it with the other available group policies in the market that offer more value for money for the employee as well as the employer with lower premium price.