Social insurance

Social insurance is any government-sponsored program with the following four characteristics:

Social insurance has also been defined as a program whose risks are transferred to and pooled by an often government organisation legally required to provide certain benefits.[2]

In the US, programs that meet these definitions include Social Security, Medicare, the Pension Benefit Guaranty Corporation program, the Railroad Retirement Board program and state-sponsored unemployment insurance programs.[1] The Canada Pension Plan (CPP) is also a social insurance program.

Similarities to private insurance

Typical similarities between social insurance programs and private insurance programs include:

Differences from private insurance

Typical differences between private insurance programs and social insurance programs include:

Difference from welfare

See also: Welfare state

With social insurance, the beneficiary's contributions to the program are taken into account. A welfare program pays recipients based on need, not contributions. In the US, Medicare is social insurance, and Medicaid is welfare.

See also


  1. 1 2 "Social Insurance", Actuarial Standard of Practice No. 32, Actuarial Standards Board, January 1998.
  2. Margaret E. Lynch, Editor, Health Insurance Terminology, Health Insurance Association of America, 1992, ISBN 1-879143-13-5.
  3. 1 2 3 4 5 Robert J. Myers, Social Security, Third Edition, Richard D. Irwin, Inc., 1985, ISBN 0-256-03307-2.

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