Employees' Deposit Linked Insurance Scheme

EMPLOYEES’ BENEFIT SCHEMES - PART-3/3

Among various employees’ benefit schemes, Employees Provident Fund, Pension Fund and Deposit Linked Insurance Schemes are recognized as effective tools for making adequate financial provision to the employees in two contingencies Premature Death, while in service and Compulsory Retirement. The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter called the Act), which is umbrella legislation and ensures social security measures for the betterment of employees of the organized sector.

EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME

Employees’ Deposit Insurance Scheme, 1976 (in short EDLI Scheme) is in the nature of an insurance scheme and is applicable to all establishments to whom Provident Fund and Miscellaneous Provisions Act, 1952 is applicable. The amount of insurance benefit is equal to the average balance in account of the deceased member in the Provident Fund during the last 12 months before his death, or during the period of membership, whichever is less. The benefit will be in accordance with age of the member and the contribution made by the employer on behalf of the deceased member, subject to ceiling of Rs. 1, 30,000. The amount is payable to the nominee of the member in the form of deposit in his/her saving bank account. 

ADMINISTRATION

The Central Board of Trustee constituted under the Provident Fund Scheme, 1952 is responsible for the administration of the EDLI Scheme. Since the Government has a financial stake in the Scheme and contributes towards the administration cost of the Scheme, it takes keen interest and monitors the administration of Scheme to see that the same is administered in an efficacious manner. The Regional PF Commissioners are responsible for speedy settlement of claims received by them.

MEMBERSHIP

The Scheme applies to all employees who-

i)             Are covered by the EPF Scheme, 1952 and

ii)            Would have been covered by the said scheme but for paragraph 27 of the Employees’ Provident Fund Scheme or the exemption granted to the establishment in which he is employed under Section 17 the Act.

CONTRIBUTIONS

a)   Contribution by Employer:

                      i.        At the rate of 0.50% of wage bill towards insurance premium.

                     ii.        One-fourth of the insurance premium towards administration of the Scheme.

b)   Contribution by the Central Government:

          The Central Government shall contribute towards the expenses, a sum equivalent to one-half of the contribution made by the employer.

The contribution of employer and the Central Government shall be credited by the respective Regional Provident Fund Commissioners to an account called the ‘Deposit Linked Insurance Account’ and all expenses to the cost of any benefit provided by the Scheme be met out of this account. The monies belonging to this account shall be invested in a manner prescribed in the rules relating to the Scheme.

EXEMPTION

Under Section 17 (2A) of the Act, an employer may seek exemption from making contribution to EDLI Scheme, if he/she provides the better insurance benefits to his/her employees than those provided by the Scheme. For this purpose, he/she may submit application to the Central Government seeking exemption from contributing to EDLI. The Central Government, after being satisfied that the Scheme of insurance offered by the employer is better than EDLI Scheme, may grant exemption. After obtaining exemption, the employer may resort to the alternative scheme in lieu of EDLI Scheme. Almost all insurance companies offer better group insurance schemes in lieu of EDLI Scheme.

Source: Student Company Secretary