Group Insurance Scheme in lieu of EDLI (From LIC of India)
It is mandatory for employers who have to comply with Employee’s Provident Funds and Miscellaneous Provision Act 1952 to subscribe to Employee’s Deposit Linked Insurance (EDLI) Scheme to provide Life Insurance benefit to all their employees.EDLI Benefits under existing PF Scheme :
Under the scheme as amended with effect from 18th June 2010, the insurance benefit is available to all employees who are members of Provident Fund (PF) which is linked to average balance to the credit of the employee in the PF during the last12 months. Insurance cover is equal to the average balance up to Rs.50000/- and where such balance exceeds Rs.50000/-, insurance cover would be equal to Rs.50000/- plus 40% of the amount in excess of Rs.50000/- subject to a maximum of Rs.100000/-. to secure this benefit, employer has to pay @ 0.5% of the salary of the each employee as insurance premium and 0.01% as administrative expenses to the PF Authorities under account No. 21 & 22.Exemption from EDLI scheme :
Under Section 17(2A) of the ACT, the employer may be exempted from contributing to this EDLI scheme, if better insurance benefits are provided through alternate scheme. LIC’s Group Insurance Scheme in lieu of EDLI has been recognized by Central Provident Fund Commissioner (CPFC) as one such better alternative.LIC’s Group Insurance Scheme in lieu of EDLI :
Benefit to employer
- Option to chose a flat cover from Rs.102000/- up to Rs.200000/- fro each employee irrespective of the PF balance or Graded cover which is better than the benefit available in PF-EDLI scheme.
- In either of the options, the insurance cover is more than the PF-EDLI cover.
- LIC premium is calculate based on age of the employee and usually it is less than premium payable to PF.
- Option for additional insurance cover as a nominal cost for deaths due to accident.
- Death claims are settled promptly.
- Flexible premium payment options – yearly, hal-yearly, quarterly and monthly by cheque/RTGS etc.
Benefits to employees
Even a newly appointed employee having NIL PF balance also gets an insurance cover of minimum Rs.102000/- under uniform cover and Rs.5000/- under graded cover.