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The EDLI scheme was launched in 1976, and is available to all employers who provide EPF provision to their employees. The scheme offers life insurance coverage to the employees.

The scheme is linked to the EPF and EPS savings scheme. All the employees who subscribe to the EPF scheme automatically get enrolled in the EDLI scheme.

The contribution @ 0.5% of each employee’s salary is payable by the Employer to the Provident Fund Authorities.

The average monthly wages drawn (subject to a maximum of Rs 15,000), during the twelve months preceding the month in which the employee dies, is multiplied by 30 times plus 50 percent of the average balance in the account of the deceased in the provident fund during the preceding 12 months or during the period of his membership, whichever is less. The minimum payable will now be Rs 2.5 lakh while the maximum will be Rs 6 lakh.

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THE BETTER ALTERNATIVE for Group Health Insurance Scheme

The employer can opt out of the scheme under Section 17 (2A) only if it has opted for a better insurance policy from a approved Life Insurance company for its employee.


The premium payable by the employer is usually less than the total contribution being paid by the employer to PF Department, particularly when the salary level is high and average age of the group is low.

Settlement of claim is quicker; Insurance company requires only the death certificate and the Claim Form from the employer.

Claim amount received by employee is tax exempted.

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

Premium is determined by the geographical location, nature of business, age of employee. Usually the premium is between 0.5% to 1 % of sum insured.

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Advantages to the Employee

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.

Claim amount can be fixed at 6.1 lacs without linking it to his salary. Where as in earlier case, the employee was getting anywhere in between 2.5 lacs to 6 lacs depending on his salary.

Steps to Introduce Group Health Insurance Scheme

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

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. The Insurance company also offers necessary guidance to the employers for seeking relaxation.

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