Social Insurance is a type of insurance sponsored by the government. This type of insurance will be usually issued to persons facing particular peril. Insurance for unemployment is an example for a social insurance. The object of social insurance programs is to transfer the risk faced by employees of an organization to the government. The main characteristics of social insurance are:
1. it provides benefits, eligibility as provided by the Social Security Act;
2. it provides for the accounting of income and expenses through trust fund;
3. it funds through taxes or premiums paid by participants; and
4. it serves a defined population.
Social Insurance is governed by the Social Security Act of 1935.