Edli

The Employees' Deposit Linked Insurance scheme provides a lump sum benefit to the nominee of an employee who dies while still in service. It sits alongside provident fund and pension as the third element of the provident fund arrangement.

Two features distinguish it from ordinary group life cover. It is funded entirely by an employer contribution, with nothing deducted from the employee, and it requires no application, no medical evidence and no underwriting. Membership follows automatically from provident fund membership.

The Deposit Linked Insurance Scheme, 1976 continues in force under the Code on Social Security, 2020, which expressly saves it along with the Provident Fund Scheme, 1952 and the Pension Scheme, 1995, notwithstanding the repeal of the 1952 Act.

For an employer, that means the obligation did not lapse with the repeal and the scheme is administered as before.

The benefit is payable on death while in service. That is the whole of the trigger, and it is where employee understanding most often diverges from the position.

An employee who leaves the organisation and dies afterwards is not covered by their former employer's arrangement. An employee who retires is not covered. An employee who is seriously ill and stops working is in a position that depends on whether the employment subsists rather than on the illness.

It also pays nothing on disability, on critical illness, or on any event short of death, which employees frequently assume it covers because it is described as insurance.

The practical implication is that this scheme is a floor rather than a benefits strategy. Organisations that offer group term life or personal accident cover in addition are covering different and wider events, and communicating the two together tends to work better than presenting either alone.

Almost everything that goes wrong with this benefit goes wrong at the nomination.

The claim is paid to the nominee recorded on the employee's provident fund record. Where that record is absent, stale or inconsistent with the employee's current family situation, the payment is delayed, disputed, or made to someone the employee would not have chosen.

• Nominations made at joining and never revisited are the norm. Marriages, divorces, births and deaths in the intervening years are not reflected.
• A nomination naming a parent, made by a young unmarried joiner, commonly survives twenty years and a family.
• Where no valid nomination exists, the claim goes through a process to establish entitlement, and the delay falls on a family at the worst possible moment.
• Nominations held only in paper files are frequently unfindable when needed.

The remedy is unglamorous and effective: prompt employees to review nominations periodically, and specifically at life events. A prompt at the point someone updates their marital status or adds a dependant costs nothing and is the intervention that actually works.

This is one of the few HR administrative tasks whose neglect produces a visible, concrete harm to an identifiable family, which is worth saying plainly to whoever owns the process.

The last row deserves attention. When an employee dies, the family is dealing with a great deal and is unlikely to know what entitlements exist. An employer that proactively identifies and initiates the claims available, rather than waiting to be asked, is doing something genuinely useful at very low cost.

This entry gives no contribution rate and no benefit amount.

Both are set by the scheme and by notification rather than by the Code, and both have been revised more than once. A figure written into a reference page becomes wrong without anyone noticing, and for a death benefit the consequence of quoting a stale figure is that a family is told to expect something other than what arrives.

The reliable source is the current scheme notification. The check worth running periodically is whether the employer's own communications and payroll configuration reflect the current figures rather than the ones in force when the process was set up.