What is an example of social insurance?

Social insurance refers to government programs designed to provide financial assistance to individuals in various situations, such as unemployment, disability, or workplace injuries. It is aimed at promoting a minimum standard of living and protecting individuals from economic insecurity through shared contributions and risk pooling.

Workers' compensation insurance is a prime example of social insurance as it is typically mandated by the government. It provides wage replacement and medical benefits to employees injured in the course of their employment, thus ensuring they receive financial support while recovering from work-related injuries. This program operates on the principle of mutual assistance, where employers contribute to a fund that employees can draw from in times of need, exemplifying the fundamental concept of social insurance.

In contrast, collision insurance, health insurance through employment, and private life insurance plans are generally based in the private market and often do not carry the same level of government involvement or social safety net characteristics that define social insurance programs.