Page 156 - Group Insurance and Retirement Benefit IC 83 E- Book

Thus Group Insurance in lieu of EDLI is a very good opportunity for all the insurers to
offer alternative and better schemes and get a large amount of business.

All employees to whom the Employee's Provident Fund and Miscellaneous Provision Act

, 1952 applies, have a statutory liability to subscribe to Employee's Deposit Linked
Insurance Scheme, 1976 to provide for the benefit of Life insurance to all their

employees. Under the scheme as amended with effect from 24th June, 2000 the insurance

benefit is equal to the average balance to the credit of the deceased employee in the
Provident Fund during the last 12 months, provided that where such balance exceeds

Rs.35, 000, insurance cover would be equal to Rs.35,000 plus 25% of the amount in

excess of Rs.35,000 subject to a maximum of Rs.60,000. Thus if the length of service is
not adequate and/ or the salary is low the average balance may be substantially less and

such the benefit to the employee's family is either inadequate or non-existent. The
contribution @ 0.50% of each employee's salary is payable by the Employer to the

Provident Fund Authorities. The EPF&MP Act, 1952 provided for a provident fund and a
family pension scheme for employees from 1971 onwards. However it was felt that

problems arising out of early death of the employee were left unaddressed. In view of

this, the Act was amended to incorporate an insurance scheme, called the Employees'
Deposit Linked Insurance Scheme (EDLIS) in 1976. The objective of the scheme was to

put in place a mechanism to provide employees' families with income security after the
death of the member. It was funded through contributions by the employer and the

Central Government with no contribution by the employee himself. The scheme has
undergone several changes since its introduction. The Government no longer contributes

to the scheme and the rates of benefits have also been changed many times. The

contributions thus come only from the employers. A comprehensive administrative
framework was set-up to ensure smooth functioning of the scheme.

Overview
S-6-C of the Act empowers the Central Government, to frame a scheme to be called the

Employees‘ Deposit-linked Insurance Scheme for the purpose of providing life insurance