Why ULIP mis-selling has become rampant ?

To address the fear and anxiety of those who lost their loved ones to the Covid-19 pandemic, the labour ministry on May 30 announced a series of insurance benefits and extension of pension coverage under the Employees’ Provident Fund Organisation (EPFO) and Employees’ State Insurance Corporation (ESIC) schemes.

ESIC’s pension coverage has been extended to the registered dependents of all those who died due to the contagious disease while the insurance benefits under the Employees’ Deposit-Linked Insurance (EDLI) scheme has also been diversified for those registered under the EPFO.

The EPFO-EDLI scheme

If an existing member of EPFO has died due to Covid-19, the dependent family members of the individual are eligible to avail of the benefits of the EDLI scheme.

The maximum insurance benefit under EPFO-EDLI has now been increased from Rs 6 lakh to Rs 7 lakh for the family members of the deceased employee. The allocation of a minimum insurance benefit of Rs 2.5 lakh has been restored for the next three years. It will reflect retrospectively from February 15, 2020.

Meanwhile, the government has announced a slight change in the eligibility criteria to avail of these benefits. The EDLI scheme will now be extended to the families of even those workers who changed their job in the past 12 months prior to their death.

Following the announcement, it has been estimated that eligible family members of the deceased will get an additional benefit of Rs 2,185 crore from EDLI fund in the years 2021-22 to 2023-24.

The ESIC Scheme

The benefits of ESIC pension scheme will now be extended to those who die of Covid-19. This means the dependent family members of an insured person will be eligible for a pension equivalent to 90% of the average daily wage that was being drawn by the worker according to the existing rules.

However, the following conditions must be met to avail the benefit of this scheme:

-Registration on the ESIC online portal is mandatory at least 3 months before the diagnosis of Covid-19 resulting in the death of the insured person.

-A person must be employed and should’ve received or be eligible to receive wages for a minimum of 78-days in the last year prior to Covid diagnosis.

This benefit will reflect retrospectively from March 24, 2020, and will remain in operation up until March 24, 2022.

“These welfare measures will provide the much-needed support to the families of workers who have died due to the COVID-19 disease and will protect them from financial hardships in these challenging times of pandemic,” the government was quoted as saying.

Who is covered under these schemes?

The EPFO covers organisations with 20 or more employees. Anyone with an EPF account is eligible for the EDLI scheme. This scheme is run on the basis of contributions received from the employer (0.5% of monthly wages paid) to the fund. There is no additional employee contribution.

The ESI Act applies to all the factories and notified establishments that employ more than 10 people. Employees who earn wages up to Rs 21,000 are eligible for the ESIC scheme that claims to benefit more than 3.49 crore families of workers across the country.