Social Insurance

What Does Social Insurance Mean?

Social insurance is a system in which citizens contribute to a government fund designed to provide services such as pensions, healthcare, or unemployment benefits. This system aims to protect individuals from the risks associated with old age, illness, and financial hardship.

Insuranceopedia Explains Social Insurance

Germany was the first country to establish a social insurance program in 1885, with Chancellor Otto von Bismarck playing a key role in its creation. The program was designed to provide for individuals who could no longer work due to illness or old age. Later, unemployment was added as a covered risk. The German model was quickly adopted by other European countries, and in 1935, the United States implemented its own program through the Social Security Act.

Social insurance benefits are typically funded through contributions from the government, employers, and employees.