ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Social insurance helps account for the lack of predictability that individuals in the market have regarding their retirement, health and stability, and thereby insures them against long term risks that they now no longer need to think about but are, for the most part, inevitable.

Detailed explanation-2: -social insurance, public insurance program that provides protection against various economic risks (e.g., loss of income due to sickness, old age, or unemployment) and in which participation is compulsory.

Detailed explanation-3: -At its most basic level, insurance provides a protective safety net that allows organisations to engage in higher-risk, higher-return activities than they would otherwise. These acts assist firms in operating successfully, resulting in more jobs and increased overall economic activity.

Detailed explanation-4: -Insurance turn accumulated capital into productive investments. Insurance also enables mitigation of losses, financial stability and promotes trade and commerce activities those results into sustainable economic growth and development. Thus, insurance plays a crucial role in the sustainable growth of an economy.

Detailed explanation-5: -Social Security provides insurance against this outcome and can therefore raise welfare. On the other hand, Social Security distorts saving behavior because it reduces the need to provide for one’s own retirement. Therefore, individuals save less and aggregate savings and output fall when Social Security is available.