Social Insurance Terminology

Social insurance usually refers to a socio-economic system that provides compensation, income for a population that is temporarily out of work, incapacitated due to disability, etc., or has suffered a loss due to health reasons.

The main programs of social insurance include pension insurance, medical insurance, unemployment insurance, work injury insurance, and maternity insurance. The social insurance program is organized by the government, which forces a certain group of people to take part of their income as social insurance tax (fee) to form a social insurance fund, from which the insured can receive a fixed amount of income or compensation for their losses if certain conditions are met; it is a redistributive system, whose goal is to ensure the reproduction of material and labor force and the stability of the society.

Social insurance is an important part of the social security system, and it occupies a central position in the whole social security system. In addition, social insurance is a kind of contributory social security, the funds are mainly paid by employers and workers themselves.

Social insurance function

The function of stabilizing social life, the function of redistribution, and the function of promoting social and economic development. The first is that the social insurance system functions as an important tool for demand management and thus plays a positive role in the economy, the second is that the effective utilization of the social insurance fund can promote sustained economic prosperity, and the third is that social security becomes a basic condition for enterprises to recruit talents.

In reality, the more developed the region, the more importance employees attach to social security. Especially in first-tier cities, social security has become an important criterion for finding a job because it is linked to eligibility to buy a house or a car. Social insurance must be based on the probability of occurrence of various risks and accidents, and in accordance with the standard of payment of the total amount of payment expenses estimated in advance, to find out the insured person's burden of a certain rate, as a criterion for determining the rate of insurance premiums.