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Employees’ Deposit Linked Insurance for cfp exam 2014-15

Posted by Prashant Shah on November 2, 2012

  1. Central Government with the motive of providing additional social security in the form of life insurance to the family of the deceased member of the provident fund, introduced the EDLI scheme in 1976
  2. Benefit under this scheme is linked to the amount accumulated in the employee’s PF account and now wages are also considered
  3. Scheme applies to all the establishments to which EPF applies
  4. Under this scheme, members do not make any contribution
  5. Employer contributes an amount equal to 0.5% of pay of employee
  6. Additional contribution of 0.01% is to be paid as administrative charges subject to minimum of Rs.2 per month

Method of calculation

Higher of the below mentioned would be paid to the nominee of the deceased:

Payout to the nominee of the deceased would be higher if the average monthly wages drawn (subject to a maximum of INR 6500) during the 12 months preceding the month in which he died, multiplied by 20 times


An amount, equal to the average balance in PF account of the deceased during preceding 12 months period.

If average balance is below Rs.50,000, Rs.50,000 is paid

If average balance is above Rs.50,000, in this case Rs.50,000 + 40% of the balance above Rs.50,000 subject to maximum of Rs.1,00,000 is paid

Maximum amount Payable is INR 130,000

Above this 20% amount is paid ad hoc. Hence maximum amount happens to be Rs.1,56,000


Mr. Shah was working with ABC Ltd., died on 15th April 2011. His date of Joining was 1st April 2008 and his current basic salary was Rs 6500 per month. His average PF balance for the preceding 12 months was INR 150000.

Step-1: Calculation based on wages

12 month average pay = 6500

20 times of the same = 6500×20 = 1,30,000

Step-2: Calculation based on PF balance

Average balance in PF account = 1,50,000

Hence, 50,000 + (50,000×40%) = 70,000

Higher of the two i.e. 1,30,000 is paid as benefit.

Hence, total amount payable is Rs.1,56,000


  1. Establishment may not apply the provisions of the scheme, if the life assurance benefits of the scheme in the establishment is more beneficial than the benefits provided under the statutory scheme
  2. Contributions are made by the employer and tax deductible expenditure
  3. Death benefit payable is tax-free





11 Responses to “Employees’ Deposit Linked Insurance for cfp exam 2014-15”

  1. R Varadarajan said

    Dear Prashant sir,

    Will the new exam pattern from Feb 2013 incorporate these changes and the answers based on the revised DLI rules outlined above.

  2. Manish said

    Dear R varadarajan only examination question patterns and total marks are going to change with effect from 1st feb 2013 however content and course remains same,and you have to wait till feb in order to know the revised rates for examination purpose.

  3. vinay said

    Sir, I have competed insurance module and now attempting retirement planning and employee benefits. I have the study material of ACE. Can you suggest some reference books for further reading?

  4. D.B.DIXIT said

    Sir, I intend to appear for retirement planning and employee benefits under the new syllabus. I have the study material of ACE. Can you suggest some reference book for further reading? Further, Can you give the revised answers to questions on retirement planning already posted by you, specially in respect of those questions where Set Bgn mode would be required to apply ?
    Dev B Dixit

    • Dear DB Dixit,

      I have not seen the books of ACE till now but they must be good. Reanswering all the question may be tough in terms of time but I will definately update it, meanwhile feel free to ask queries. We all will help you.

      Prashant V Shah.

  5. D.B.DIXIT said

    Thanks for your responses.


    What about if employee died after two months of joining. then how the average wages calculated.

  7. Harshil Roy said

    That means nobody will be paid less than Rs. 130000 under EDLI

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