The Federal Government has changed its policy on life insurance coverage.
While some people still will need to cover a personal injury claim through their employer’s life insurance company, the changes mean those who do will need only a commercial insurance policy.
Life insurance coverage for those who are not covered through their own employer is not going to change.
“It will still be covered under commercial insurance,” said Kevin Sorenson, president of the Canadian Life Insurance Association.
“There’s not a change in coverage.”
The change in policy coverage means people who are self-employed or who have a small business will need a policy with a commercial insurer.
It’s also important to note that the new policy is only applicable to the federal government, not provincial or territorial governments or the private sector.
For the first time in almost three decades, people will be able to get commercial life insurance for the first year of employment.
While the change is good news for those that work in the public sector, it’s not great news for people who work in private businesses.
“The impact of this change will be that more people will not be able access life insurance as they’re starting their own business,” said Sorenbyson.
“That’s a significant impact for a small group of people.”
He said some people might need to change their business plan or their job to avoid losing the policy.
“But I’m confident that there are a number of people that will be covered.”
For those who need to be covered, Sorenbinso said there are other options.
“You could use a personal insurance policy that has a deductible that is set to a reasonable amount, but then you can go with a business insurance policy with the deductible set to the level of what your company is paying for life insurance,” he said.
“Or, you could take a commercial policy with an annual deductible that’s set to be comparable to what your employer is paying.”
For a limited time, the federal health insurance rebate is available to those who work with a small company, such as a grocery store, as long as they have a commercial life policy that includes commercial insurance.
The Federal Partner Program (FPP) offers a $25 rebate to small business owners, which will be available to them for up to two years.
The Government will announce a final policy for small business insurance in the coming weeks.
“We’re going to have to make some adjustments to ensure that we’re meeting the requirements that the rebate is intended to meet,” said Rob Nicholson, the manager of the FPP.
“And, we’ll have to do a bit of an audit.”
The changes mean it will be a few more years before the new commercial policy coverage is available for employers.
“I would expect that the small business owner’s case will have to wait a while longer, and I wouldn’t expect that they will have the same flexibility that the employer’s case would have,” said Nicholson.
“For people who don’t have a lot of flexibility, it will likely be a longer wait for them.”
The Federal Taxation Office will begin reviewing the changes in January, and then it will take up the issue with the provinces and territories, which are still reviewing the policy changes.
“The Federal Government recognizes that some Canadians might not be satisfied with the current commercial insurance coverage available to businesses, and will be making changes to the system to provide an alternative for Canadians who are looking for the right coverage to meet their personal needs,” said a spokesperson.
The changes are expected to take effect in 2019.