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Social Insurance for Survivors: Family Benefits from Social Security and Workers' Compensation

By: Daniel Mont, Virginia Reno, and Catherine Hill
Published: March 2002
Social Security Brief No. 12 ~ March 2002

Summary: The terrorist attack of September 11, 2001, draws attention to two long-standing social insurance programs that pay cash benefits to families when a breadwinner dies. Workers' compensation pays benefits if a worker is killed at work. Social Security pays families whether or not the worker's death is work-related. Although neither program is best known for its life insurance component, both can provide substantialincome to surviving families.

This tragedy highlights important differences between Social Security—which pools risk across the nation—and workers' compensation—which puts financial risk on individual employers and their insurers. For Social Security, the impact of the September 11th tragedy will not be large, because the number of new applicants represents a small fraction of the total number of new claims. State-based workers' compensation programs, however, are more vulnerable to catastrophic events. State workers' compensation programs vary in eligibility standards and benefit levels. New York is one of the few states that reduce a widow(er)'s benefit if she or he also receives Social Security. New York also has a relatively low cap on weekly benefits.

In the decades since Social Security and workers' compensation began, health insurance coverage has become increasingly important for financial security. Although various federal and state programs are available, maintaining a secure connection to group health insurance can be problematic when a breadwinner dies. Neither Social Security nor workers' compensation programs offer assistance in this area.