Apart from that, this contribution to EPF also entitles you to a life insurance cover.
The cover is called the Employee Deposit Linked Insurance (EDLI), and in case of death of a provident fund (PF) subscriber, it is payable to the subscriber's heirs.
Who is covered
The scheme covers all those who are employed in the organised sector and contribute to a provident fund.
It is the responsibility of the employers to ensure that all their employees are subscribed to the EPF schemes.
The terms and conditions of the EDLI scheme are set by the EPFO.
However, if some employers provide a separate life insurance cover to their employees, they may seek the consent of the Employees' Provident Fund Organisation (EPFO) to opt out of this insurance scheme.
The employee does not have to bear any extra cost to avail the life insurance cover. The employees' contribution to the PF covers all the costs.
Insurance amount
The maximum amount that the family of a deceased can claim, was increased recently. The increase was announced in September 2015, and notified in May this year.
As per the new notification, a life cover of up to Rs6 lakh can be claimed by the nominee or legal heir of the provident fund subscriber.
The cover is calculated on the basis of the average monthly salary drawn in the 12 months preceding the death of the employee. The highest salary that can be considered for this purpose is Rs 15,000. Salary here means basic plus dearness allowance.
The family can claim 30 times the average salary, calculated in this manner.
Along with this: 50% of the balance in the subscriber's EPF account, or Rs 1.5 lakh-whichever is less-can be claimed as bonus. And the life cover, along with the bonus, is subject to a limit of Rs6 lakh.
This is irrespective of the age of the employee.
Claim process
In case of death of an employee, the nominee can claim the insured amount. Documents such as death certificate, succession certificate, and bank details need to be provided to claim the insurance money.
If there is no nominee in a provident fund account, the legal heir can claim this amount.
The claim form for EDLI should, ideally, be submitted along with the claim form for EPF withdrawal to the employer.
The application needs to be attested by the employer under whom the provident fund member was last employed.
The claim can only be initiated if the death occurred while the provident fund subscriber was employed in active service. The cover extends to beyond working hours and leave days.
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