Social
insurance is generally defined as a system that aims to guard against the
consequences of social risks, to which workers who cannot face these risks
alone are exposed to their weak financial means. These risks are of two types,
work-related risks, such as work injuries or occupational diseases; and common
risks common to workers and others, such as disease, aging, disability, and
death, pension insurance, heir’s insurance, and unemployment insurance.
Countries
usually include social insurance types, starting with some of them and then
extending to all types of insurance. The social security system is administered
or supervised by the state and is based on contributions paid by individuals,
and it maintains their continued access to income in cases of unemployment,
illness, and retirement, and in other additional cases. Insurance systems
differ between the local and the national levels, and the income coverage
system (when it is interrupted), through social insurance, is often limited to
specific periods, not to infinity. Also, most systems set conditions for
eligibility, in addition to the payment of contributions, which leads to the
exclusion of many women and young adults.
Thus, the primary goal of social insurance is to
ensure an adequate standard of living for each insured when the ability to earn
is temporarily lost, or for a reason, that is outside their control, and it is
provided with material security, health services, and vocational rehabilitation
in the event of disability. Also, this system includes the guarantee of those
left by the insured who are members of his family, who was dependent on them
before his death.
Insurance creates a feeling of relief and safety for
the worker and his family, and this undoubtedly has implications for worker productivity
and social ties between him and the employer who shares his insurance share.
Also, in this, the society is protected from corruption and deviation, as this
system provides compensation for the unemployed. Countries are also investing in the insurance reserve in setting up various projects, which provides an
opportunity to create job opportunities for many workers.
Social insurance, more specifically, means that
"the system that guarantees compensation to the insured or his family for
the lost income in the event of exposure to one of the risks that lead to his
inability to work, and then obtain a wage, as well as the availability of
treatment and rehabilitation services." This system is based on collecting
submitted contributions, in order to pay benefits in cases of emergency to
which the insured is exposed to. This is confirmed by the definition of the
British Encyclopedia of Social Insurance, as the program or system that
essentially requires protection against various economic risks; and this system
is usually mandatory by society to protect all its sectors and needy
categories.
Social insurance is a means or system for compensating
material losses, and therefore its effectiveness is related to the adequacy of
this compensation. Whenever the amount of the insurance is sufficient to face
the losses arising from the verification of the insured risk, we realize the
success of the insurance in achieving the justifications for its emergence and
prosperity.
Insurance has several types, including:
Social insurance
Which cares - by virtue of his compulsion and the
nationality of his field - of meeting the needs of the insured, who represent
all or most sectors of society. And its main axis from the beginning is the
will of society. Hence, since its inception and the spread of social insurance
systems, its interest has been in the adequacy of compensation and benefits,
especially for people of advanced ages, low incomes, or large numbers of
dependents. It, therefore, takes into account considerations of social adequacy
of benefits, as well as fairness in the distribution of burdens of those
benefits, among the sources of financing. Social insurance is more akin to
public aid systems than insurance. It also has an inherent social character,
which becomes increasingly clear and multiple forms and applications, with
multiple sources, compulsory extension, and general national sphere.
Private or commercial insurance
which works on an individual or a group level, and the
basis for this is the will of the individual or group. This type seeks to
increase the spread by increasing the number of insured units, and it cares
about two things together:
A. The sufficiency of its benefits, such as
compensation, and the insured's bearing of insurance premiums, that is, the fairness
of his burden distribution, and through his advantages the insured can fulfill
his economic and social function, to meet the material losses that are
achieved, so the insured is convinced of its importance.
B. Through the fair distribution of his burdens, they
feel that they are getting insurance benefits that match their payments.
Mutual insurance
And it is done by a group of individuals or
associations, to compensate for the damages that are caused to some of them.
As such, social insurance of all kinds is an effective
and the preferred method for both workers and the government. It is a preferred
method for workers because it creates confidence and a sense of dignity in the
same worker, and makes him feel that what is paid to him through insurance is not
charity, but it is an acquired right. On the government’s side, insurance is a
preferred financial instrument because its contribution can be raised when
necessary, and it can also be backed by a reserve balance to be invested in the
face of emergencies.