FAQs – EDLI Scheme, 1976

The Central Government with the motive of providing additional Social Security in the form of Life Insurance to the family of the deceased member of the Provident Fund, introduced the Employees Deposit Linked Insurance Scheme with effect from 1-8-1976 as provided under Section 6(C) of the Employees’ Provident Fund & MP Act, 1952. The benefit under the Scheme is so devised that it acts as an incentive to the members to save more in their Provident Fund Account. As the name of the Scheme says, the benefit is linked to the amount of accumulation in the Provident Fund Account of the member.

Applicability of EDLI

The Scheme applies to all the establishments to which the Employees’ Provident Fund Scheme applies.

Membership for EDLI

All the members of the Employees’ Provident Fund Scheme are covered as members of the Employees’ Deposit Linked Insurance Scheme also.

Contribution Rate of EDLI

Under this Scheme, the member do not contribute any amount as contribution. However, the employer pays an amount equal to 0.5% of the total wages paid to the members as contribution.

Administrative Charges – EDLI

As regards Administrative charges, the employer is required to pay an amount equal to 0.01% of the wages subject to a minimum of Rs. 2/- per month.

Exemption from EDLI under Section 17(2A)

The provisions are available as per Section 17(2A) of the Act and para 28(1) and 28(4) of the Employees’ Deposit Linked Insurance Scheme , 1976 for grant of exemption to an establishment or to an employee or to a class of employees as the case may be, from the operation of all or any of the provisions of the Scheme, where the Life Assurance benefit of the Scheme in the establishment is more beneficial than the benefits provided under the statutory Scheme.

Inspection Charges Rate – EDLI

An employer of an establishment exempted from the provisions of the Employees’ Deposit Linked Insurance Scheme is required to pay inspection charges at the rate of 0.005% subject to a minimum of Re.1/- per month.

Assurance Benefit under EDLI

The benefit provided under the Employees’ Deposit Linked Insurance Scheme is called Assurance Benefit. On the death of the member while in service, the nominee or any other person entitled to receive the Provident Fund benefits will, in addition to the Provident Fund, receive the Assurance Benefit under Employees’ Deposit Linked Insurance Scheme .

Scale of Assurance Benefit under EDLI

From 1-4-93 onwards the amount of Assurance Benefit payable is an amount equal to the average balance in the amount of deceased in the Fund during the preceding 12 months or during the period of his membership whichever is less, except where the average balance exceeds Rs. 25,000/- amount payable shall be Rs. 25,000/- plus 25% of the amount in excess of Rs.25,000/- subject to a selling of Rs. 35,000/-. The Form prescribed for claiming the Assurance Benefits under the Employees’ Deposit Linked Insurance Scheme, 1976 , is Form 5(IF).

* w.e.f. 24.6.2000 the amount of benefits has been increased to 60,000/-

Group Insurance Scheme – The alternative to EDLI

All employees to whom the Employee’s Provident Fund and Miscellaneous Provision Act , 1952 applies, have a Statutory liability to subscribe to Employee’s Deposit Linked Insurance Scheme, 1976 to provide for the benefit of Life insurance to all their employees. Under the scheme as amended with effect from 24th June,2000 the insurance benefit is equal to the average balance to the credit of the deceased employee in the Provident Fund during the last 12 months, provided that where such balance exceeds Rs.35,000, insurance cover would be equal to Rs.35,000 plus 25% of the amount in excess of Rs.35,000 subject to a maximum of Rs.60,000. Thus if the lenth of service is not adequate and/ or the salary is low the average balance may be substantially less and such the benefit to the employee’s family is either inadequate or non-existent. The contribution @ 0.50% of each employee’s salary is payable by the Employer to the Provident Fund Authorities.

However, under Sec. 17(2A) of the act, the employer may be exempted from contributing  to this scheme, if he/she has provided for better insurance benefits through alternative scheme. LIC’s Group Insurance Scheme in lieu of EDLI has been accepted as one such better alternative.


a) The premium payable by the employer is usually less than the total contribution being paid by the employer to R.P.F.C; particularly when the salary level is high and average age of the group is low.

b) Settlement of claim is quicker, LIC requires only the death certificate and the Claim Form from the employer.

c) Premium paid by the employer is treated as normal business expenses for Income-Tax purpose.


Each employee is covered for a sum assured ranging between 5,000 to 2,00,000 depending upon the current salary and service put in from day one irrespective of the actual balance in the Provident Fund. Alternatively every employee/ worker can be covered for a  uniform sum assured which will be decided  depending upon the group size.


Double accident benefit can be allowed to the extent of the Sum Assured for an extra Premium.


a) Put up notice for the knowledge of the employees that you are going in for LIC’s Scheme in lieu of EDLI.

b) Apply to the Regional Provident Fund Commissioner under Sec.17 (2A) of the E.P.F. and M.P. Act 1952 to exempt you from EDLI Scheme. The application should be accompanied by the prescribed requirements including the Rules of the Proposed Group Insurance scheme. Central PF Commissioner, has authorized the R.P.F.C. to grant exemption from the 1st of the month in which the application for relaxation is submitted. LIC also offers necessary guidance to the employers for seeking relaxation.

One Response

  1. R Varadarajan

Leave a Reply