Social Insurance | Definition | Features | Importance

Social Insurance

Introduction:

Social insurance is one of the devices to prevent an individual from falling to the depths of poverty and misery and to help him in times of emergencies. Insurance involves the setting aside of sums of money in order to provide compensation against loss, resulting from particular emergencies.

The elimination of the risk of the individual is the basic idea of insurance. It is primarily the effort of the social group, in place of the individual effort, to lessson the incidence of loss on the individual.

We may define social insurance as "a co-operative  device, which aims at granting adequate benefits to the insured on the compulsory basis, in times of unemployment, sickness and other emergencies, with a view to ensure a minimum standard of living, out of a fund created out of the tripartite contributions of the workers, employers and the State, and without any means test, and as a matter of right of the insured".

Main features:

1) It involves the establishment of a common monetary fund out of which all the benefits in cash or kind are paid, and which is generally built up of the contribution of the workers, employers and the State.

2) The contribution of the workers is merely nominal and is kept at a low level so as not to exceed their paying capacity, whereas the employers and the State provide the major portion of the finances. This means that there is no close correspondence between workers' own contribution, and the benefits granted to them.

3) Benefits are granted as a matter of right and without any means test, so as not to touch the beneficiaries' sense of self-respect.

4) Social insurance is now provided on a compulsory basis so that its benefits might reach all the needy persons of the society who are sought to be covered.

5) The benefits are kept within fixed limits, so as to ensure the maintenance of a minimum standard of living of the beneficiaries during the period of partial or total loss of income.

6) It has to be borne in mind that social insurance alleviates the sufferings of the individual from the particular event, but it doesnot prevent it. As a matter of fact, when prevention is impossible, or nearly so, that insurance has its greatest appeal.

Importance:

Although social security measures had been introduced in many countries decades ago, in India they were introduced only after the independence of the country because of the lack of official sympathy and the weakness of trade unions. Thus, the importance of social security measures in India cannot be exaggerated.

It is a well-established fact that ours is a poor country and the wages of our workers are so low and so niggardly as to permit anything but a below subsiatence standard. In some parts of the country, it is too low to maintain a minimum standard. Sir William Beveridge has rightly remarked that"the more you are poor, the more you need social security. Really social security is a measure to increase the national welfare."

Indian workman is composed of social evils like disease, unemployment, ignorance, squalor and illiteracy which endanger the safety of their life. They find themselves unable to fight against these contingencies due to their low earnings, high prices, high birth and death rates etc.

The worries for maintaining himself and his dependents ultimately affect the efficiency of the worker to a great extent. The provisions of social security measures may prove to be of great help to the workers in emergencies. Many social evils such as beggary, dishosesty, prostitution etc., take place only in poverty and can be removed through to social security schemes.

The working conditions in Indian indyatries are quite unhygienic and distressing. The worker is insecure as regards employment. He may be kicked out of job at any time unsympathetically. The social security measures provide security to the worker against unemployment.

The constitution of India has affirmed to all people of the country, inter alia, social and economicc justice, but this has yet ro be secured by peaceful social and legislative steps. The underlying idea behind social security measures
is that a citizen who has contributed or is likely to contribute to his country's welfare should be given protection against certain hazards.

Realising the importance of social security and assistance, the universal Declaration of Human Rights proclaims-"Everyone, as a member of society, has right to social security, and is entitled to realisation, through national efforts and international cooperation and in accordance with the organisation and resources of each state of the economic, social and cultural rights indispensable for his dignity and the free development of the personality."

LEGISLATION:

Workmen's Compensation Act, 1923
Employees State Insurance Act, 1948
Maternity Benefits Acts, 1961
Coal-Mines Provident Fund and Bonus Scheme Act, 1948
Employees Provident Fund Act, 1952
Family Pension Scheme, 1971
Payment of Gratunity Act, 1972
Deposit-Linked Insurance Scheme, 1976
Personal Accident Insurance Special Security Scheme, 1985