“EPFO’s Game-Changer: Life Insurance Cover Soars to ₹7 Lakh with EDLI Overhaul!”
The EPFO has announced an increase in life insurance cover under the EDLI scheme, now providing benefits of up to Rs 7 lakh. Effective retroactively from April 28, 2024, this enhanced coverage aims to offer better financial security to over 6 crore EPFO members and their families. Discover the key features and implications of this vital safety net.
The government today announced a sweeping increase in insurance benefits to members of the Employees’ Provident Fund Organisation or EPFO under the Employees’ Deposit Linked Insurance, EDLI scheme. The new scheme promises as much as Rs 7 lakh of life cover. It means the EPFO member’s family is to get far greater financial security in case the member dies. This new insurance cover will be operational even for cases that have recently happened and it will be applicable from April 28, 2024.
Increased Life Cover under EDLI Scheme
Insurance benefits under the EDLI scheme, which commenced operations in 1976, would, in case of an untimely death of a member, bring financial shock for the families of EPFO members. The new hike in the EDLI scheme will increase the maximum life cover insurance to Rs 7 lakh from Rs 6 lakh. This will especially benefit those beneficiary families whose income earners are the sole breadwinners.
The minimum amount that comes to families as much-needed relief in terms of financial support has been the benefit, said Vishal Gehrana, principal associate at Karanjawala & Co and an advocate on record at the Supreme Court. He further added that transparency and efficiency of the scheme and the rollout could not be promised at the same time as the ease with which people could gain access to these benefits would be very important to gain public trust in India’s social security system.
Key Features and Benefits of the Overhauled EDLI Scheme
- Life Insurance Cover of Up to Rs 7 Lakh:
Life insurance has been enhanced from a maximum of Rs 6 lakh to Rs 7 lakh under the new EDLI scheme. All these improvements are applicable w.e.f April 28, 2024. With this, in case of death of an EPFO member, the cover would benefit the legal heirs.
- Minimum Insurance Cover Increased:
It also increased the minimum insurance benefit amount to Rs 2.5 lakh. The previous minimum cover was Rs 1.5 lakh, which existed till April 2021 when the government doubled this up to Rs 2.5 lakh so that a greater base level of financial security can be allowed to the recipients.
- No Continuous Service Requirement:
One of the major improvements in this scheme is that the insistence on 12 months of continuous service under one establishment is now waived. In the past, before such insurance benefits could be claimed, the employee should have rendered a minimum of 12 months of continuous service under one organization only. It also ensures that the employees, who have left the job within the qualification period, will not lose their rights; thus, the scheme is more liberal and flexible as according to new trends in work. 4. Coverage for 6 Crore EPFO Members:
This means that the coverage under the scheme is now over 6 crores members of EPFO. This is the highest addition that can ever be recorded in the safety net of EDLI Scheme and thereby shields a larger population of working individuals and their families.
Historical Development of EDLI Scheme:
This scheme EDLI was conceptualized back in the year 1976 for providing financial support to the family of an EPFO member in case a member dies. Hence, the scheme has undergone many amendments and changes many times with time, made to cope up with the changing economic conditions and the ever-changing needs of employees.
In 2018, the government capped the minimum life cover under the scheme at Rs 1.5 lakh while keeping the maximum benefit, caped at Rs 6 lakh. The government in April 2021 hiked both these benefits to Rs 2.5 lakh as the minimum cover and Rs 7 lakh as the maximum. These new benefits were till March 31, 2024, initially for three years and expired on April 27, 2024.
But the new step taken by the government is even more aggressive: it has extended these benefits which were enhanced beyond April 2024, and this would be in a retroactive manner from April 28. Hence, members under EPFO and their families would continue to enjoy financial security.
Why Does It Matter
It is today, when financial security is the most critical of them all, especially for families with only one bread earner, that the hike in life cover and the abolition of the continuous service requirement assume much greater relevance. It is the EDLI scheme that offers the necessary support mechanism to EPFO members when there is the loss of the bread earner and helps the family overcome financial gestations that naturally follow.
More importantly, the maximum life cover has been increased to Rs 7 lakh and it certainly provides more substantive cushioning of financial aid to families in order to take care of immediate expenses like medical bills, education costs, or living expenses.
The only thing left behind is that they are applied retroactively.
The message is that the modifications be brought to the notice of EPFO members so when new EDLI scheme comes, they receive all the benefits they deserve. This again will be the responsibility of the employer to send messages to their employees about such a change so all eligible members and their families can easily access the insurance benefits.
Therefore, the action of the government in the backdrop of doing a major start in providing financial security during emergency times that it has been endeavoring to do as a part of social security strengthening measures particularly for the members of EPFO, has indeed proved useful. Many other factors have been troubling, particularly related to such aspects as transparency and accessibility, but such factors can easily help authorities garner greater confidence in the social security systems of the country, wherein EPFO members, along with their families, would be at an advantage during key moments when they really need it.
Major step in the financial safety of EPFO members is taken by raising the insurance cover under the EDLI scheme to Rs 7 lakh from the erstwhile Rs 6 lakh.
It is a new welfare measure which will benefit crores of workers and their families as the service requirement, which has been relaxed and this scheme has also been given an effect of the date of commencement of this scheme.
This will certainly bring relief and security to millions of workers and their families in times of distress. As this new scheme is effective from April 28, 2024, members must be well-informed about all the benefits available to them so that they can avail themselves of all the support they are lawfully entitled to.
