Social Insurance: Meaning, Scope, Characteristics, Need and Limitations

Your local chaiwala in Belapur has no employer, no pension and no health cover, yet a hospital bill can wipe out a year of his savings. A salaried clerk in a mill town, by contrast, may have a fund, a hospital scheme and an accident benefit that the law itself forces his employer to provide. Why does the state step in for one and not leave everything to private insurers? This topic answers that: social insurance is insurance that the law organises for groups who could not safely be left to the market.

In two minutes

Social insurance is a compulsory, state-organised scheme that pools contributions to protect workers and their families against income loss from old age, sickness, accident, unemployment or death of the earner, with benefits fixed by statute rather than by individual bargaining.

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