How does social insurance differ from private insurance?

Social insurance is characterized by its government provision and funding through taxes. This means that the government plays a central role in administering the program, typically designed to offer a safety net for citizens, particularly during times of need such as retirement, disability, or unemployment. The funding mechanism distinguishes social insurance from private insurance; specifically, social insurance does not rely on individual premiums paid by policyholders but is instead financed through compulsory contributions or taxes collected from the workforce.

The aim of social insurance is to provide a broad base of coverage for all eligible citizens, promoting universal access and reducing inequality within the system. This collective approach contrasts significantly with private insurance, which often caters to those who can afford premium payments and may impose underwriting criteria that can restrict access based on individual risk assessments.

In this context, the other options do not reflect the core principles or operational structure of social insurance. For instance, the notion that it is funded by private premiums is incorrect because social insurance is taxpayer-funded. Similarly, the idea that it only covers high-risk individuals does not apply, as it generally offers coverage to all who meet eligibility requirements, not just those deemed high-risk. Lastly, the requirement of health assessments for eligibility is more typical of private insurance, which assesses individual health risks to determine