ABSTRACT
Social insurance is a part of social security. Its distinguishing feature is the financing of a substantial part of its cost by contributions from the beneficiaries or on their behalf from their employers, and the linking of benefits to contributions. The basic element common to private and social insurance is the covering of risks, and the differences between them are essentially those of method. In periods of inflation, actuarial methods will need to be applied in real terms when relating values over a period of time. Contributions to social security schemes are usually compulsory, and some people claim that this feature makes the use of the term ‘insurance’ inappropriate. Contributions by employers differ from those by the state in being a labour cost of production closely related to wages and employment. Governments, in addition to bearing the cost of public assistance, usually make contributions to social insurance.
