What Does Social Insurance Mean?
Social insurance is a system in which citizens of a state contribute to a government fund set up to provide services like pension, healthcare, or unemployment benefits. This system is a way for the state to protect its people from the hazards of old age, sickness, and financial despondency.
Insuranceopedia Explains Social Insurance
Germany was the first country to create a social insurance program in 1885. The country’s then chancellor Otto Von Bismarck helped bring it about to provide for those could no longer work because of ill health and old age. Later on, unemployment was added as a risk that would be covered by insurance. The German model was soon adopted by other European countries and in 1935 the United States instituted its own program through the Social Security Act.
The funds for social insurance benefits are often pooled from the government, the employers, and the employees.