PF is deducted from every salaried person's salary, but most employees are unaware of the free insurance of Rs 7 lakh that comes with it. The insurance amount is determined based on the employee's salary for the last 12 months. To secure your family's financial future, understand the rules and eligibility criteria of this essential insurance scheme of EPFO. The Employee Provident Fund (EPF) is the most important social security scheme for salaried employees in India. It is run by the Employee Provident Fund Organisation (EPFO) and provides financial security to employees after retirement.

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Under the EPF scheme, employees contribute a portion of their basic salary each month to a provident fund account. The employer also contributes an equal amount. This amount earns interest over time, building a substantial retirement fund for the employee.

Under the Employee Provident Fund Organization 3.0 amendments, the organization has made it easier for employees to withdraw PF funds even before retirement. These changes are primarily aimed at promoting digitization and reducing paperwork. This is expected to result in faster claim settlements, improved online services, easier account management, and faster PF savings for employees.

However, many employees don't know that EPF accounts also come with special insurance coverage. According to EPFO ​​rules, eligible EPF members can avail insurance coverage of up to ₹7 lakh under the Employee Deposit Linked Insurance (EDLI) scheme. Employees don't have to make any additional deposits to avail this facility.

Who can avail the benefit of this insurance?

According to the EPFO, this insurance automatically applies to all EPF members. If an employee dies while on duty, the nominee can claim the insurance amount. According to the EPFO ​​website, if an employee dies while on duty, the nominee can receive a minimum of ₹2.5 lakh and a maximum of ₹7 lakh. This amount is determined based on the employee's salary and EPF account status.

Under the EDLI scheme, the employer contributes 0.5% of the employee's salary to the insurance fund. The employee does not have to contribute anything. Claims made under this scheme are generally settled within 20 days, ensuring the family receives financial assistance as quickly as possible.

How is the sum assured determined?
Under the EDLI scheme, the sum assured is determined based on the employee's salary and the amount deposited in the EPF account. The insurance benefit can be calculated in two ways. As per the prescribed conditions, it is based on the employee's average PF balance for the last 12 months: 35 times the employee's average monthly salary (up to a maximum of Rs 15,000) and 50 percent of the average PF balance. However, the maximum limit for additional amount linked to the PF balance is Rs 1.75 lakh.

How much profit is earned?
Minimum insurance benefit: Rs 2.5 lakh
Maximum insurance benefit: Rs 7 lakh (with 20% extra increase)
Thus, EPF is not only a way to save for retirement, but it also provides a good insurance cover to employees and their families.

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