Principles of Social Insurance

There are eight (8) underlying principles of Social Insurance. These principles are the foundation of the National Insurance System.

These principles are:


All persons who qualify as insured persons are covered under the NI Act without exception.


No one who qualifies as an insured person is allowed to opt out of the system.

Pooling of Risk

The risk and cost are spread out over a large number of persons thereby making the system affordable.


Social Insurance is portable, following the worker from job to job.

Wage Stop

This principle aims to cover a level of earnings that will guarantee a reasonable level of income replacement for the lower middle income earners.

Loss of Earnings

Benefits are paid subject to loss of earnings.

Economic Independence

Benefits form only a percentage of assumed earnings. Workers must not be provided with an incentive to stay away from the job. For the welfare of the country, all the skills and resources are required on the job to facilitate the task of national development.


Income is distributed from high wage earners to low earners; from well to the sick; from the employed to the retired; from the living to the dependents of the dead.