The subscribers of the Employees’ Provident Fund Organisation (EPFO) can pay their Life Insurance Corporation (LIC) policy insurance premium through the Employees’ Provident Fund (EPF) accounts.
How to Make LIC Premium Payment From EPF Account?
The EPFO subscribers must submit Form 14 to the EPFO to make the LIC premium payments from their EPF account. However, they must ensure that their EPF balance equals two years of the LIC premium amounts while submitting Form 14. They can avail the facility to pay the LIC premium through EPF accounts while buying a LIC policy or later while paying the LIC premium.
Linking EPF Account With LIC Policy
The subscribers must submit Form 14 to the EPFO to avail the premium payment facility through the EPF account and allow EPFO and LIC to link up their EPF account and LIC policy. The EPF account and LIC policy link will enable the EPFO to withdraw a sum equal to the LIC insurance premium and remit the LIC policy when it becomes due.
However, the subscribers must be a member of the EPFO for at least two years to be eligible to opt for the LIC premium payment facility. The EPFO rules allow only LIC premium payments, and the EPFO subscribers cannot exercise this facility for other insurance premium payments.
LIC premium Payment From EPF Account Benefit
The EPFO rule that allows subscribers to pay the LIC premium will benefit employees under financial stress in the prevailing COVID-19 crisis. They can use their EPF balance as an option to continue the LIC policy since both the EPF and LIC policy are a significant part of a professional person.
However, the EPFO subscribers should pay their LIC policies from their EPF only when there is any financial crisis, as the EPF is a retirement benefits scheme. They must discontinue the LIC insurance premium payment facility from the EPF account after their financial situation improves.
An employee contributes 12% of the basic salary towards the EPF fund, and the employer contributes 8.33% towards the Employees’ Pension Scheme (EPS) and 3.67% towards the employees’ EPF.
The EPF is a retirement benefit for the employees, where they can withdraw the EPF amount at the time of their retirement. Thus, the employees can avail of the option to pay their LIC policies from the EPF account when they face a financial crisis due to a situation like the COVID-19 pandemic.
For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in
I am an Advocate by profession. I interpret laws and put them in simple words. I love to explore and try new things in life.
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