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Employment Insurance for self-employed Canadians
Banking and Online Insurance in Canada


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The opinions expressed herein are my own personal opinions and do not represent my employer's view in any way.

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# Monday, November 16, 2009
Monday, November 16, 2009 3:06:27 PM (GMT Standard Time, UTC+00:00) ( General Life )
With an estimated 2.6 millions being self-employed, the Minister of Human Resources and Skills Development has announced that the Government of Canada has introduced the Fairness for the Self-Employed Act. This new legislation is intended to extend Employment Insurance (EI) special benefits which will include maternity, parental, sickness and compassionate care benefits for those Canadians who are self-employed.

Traditionally, Canadians who are considered self-employed have had little and/or no income protection in regards to major life events. Situations such as sickness or injury, giving birth, caring for a newborn and/or a newly adopted child, or assuming the care for a gravely ill family member have usually only been covered for those who are employed by an employer and who are entitled to EI benefits through paying via their weekly deductions.

The Fairness for the Self-Employed Act is aimed at rectifying these situations which face not only those who have employers, but also those who are self-employed. This act is in response to the Federal Government's 2008 pledge to help provide improved economic security as well as support for all Canadians who are self-employed. These changes will allow self-employed Canadians to voluntarily opt into the EI program in order to be eligible for these special benefits. These special benefits are intended to closely mirror those that are currently available to salaried employees.

Through the new legislation, self-employed Canadians who opt into the EI program will be eligible to receive special benefits that are currently available to salaried employees such as:

•    Maternity Benefits. 15 weeks are available for birth mothers and covers the period surrounding birth; a claim can start up to 8 weeks before the expected due date.
•     Parental/Adoptive Benefits. A maximum of 35 weeks are available to biological or adoptive parents for caring for either a newborn or a newly adopted child; this may be taken by either parent or shared between them. If the parents are sharing, only one waiting period must be served.
•    Sickness Benefits. A maximum of 15 weeks are available for a person who is unable to work due to sickness, injury and/or quarantine.
•    Compassionate Care Benefits. A maximum of 6 weeks for a person who temporarily has to be away from work in order to provide care and/or support to a family member who is gravely ill and has a significant risk of dying.

In order to be eligible for these benefits, self-employed Canadians will be required to opt into the program at least one year prior to claiming benefits. They must also be responsible for making premium payments starting with the tax year in which they apply to the program, i.e. a program start date of January 2010 mean that claims can be made as early as January 1, 2011. In order to access EI special benefits, self-employed Canadians will need to earn a minimum of $6,000 in self-employed earnings over the preceding calendar year.

Self-employed people can also opt out of the EI program at the end of any tax year if they have never claimed benefits. For those who have claimed benefits they will have to contribute on self-employed earnings for as long as they remain self-employed. Self-employed Canadians will pay the same EI premium rate as salaried employees, but will not be required to pay the employer portion of those premiums as they will not have access to EI regular benefits.

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# Tuesday, November 03, 2009
Tuesday, November 03, 2009 4:53:36 PM (GMT Standard Time, UTC+00:00) ( General Life )
Starting in 2010 Canadian banks will be prohibited from selling insurance products via their primary websites. Currently Canadian top banks such as the Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal, CIBC and the Toronto Dominion Bank offer their customers the option of purchasing insurance online from their main banking websites. The Minister of Finance Jim Flaherty announced that the new rules regarding the sale of insurance products over the internet will become applicable when the next budget comes into effect in early 2010. This will essentially reverse a decision that had been made in favor of the banks earlier this year.

The Bank Act prohibits the banks from directly selling insurance in their branches; however the Office of the Superintendant of Financial Institutions (OSFI) ruled in June that a bank website is not the same as a bank branch, thereby allowing for the sale of insurance products online. However, Flaherty considers a bank’s primary website a virtual bank branch, making the sale of insurance against the rules. Recently Flaherty faxed letters to the CEOs of Canadian banks requesting that they change their websites to preclude the sale of insurance; most banks have not complied with this request. Flaherty has stated that he intends to change the Canada’s Bank Act to prohibit banking websites to sell insurance, making this current practice illegal.

The Canadian Bankers Association, which represents 50 Canadian banks, claim that Flaherty made this recent change without any consultations with either the public or the banking industry. In an emailed statement, the CBA said they were “shocked that Mr. Flaherty would want to limit how and where consumers can access information about insurance.” Flaherty’s decision to amend the current legislation came as a result of Liberal MP Alexandra Mendes introducing a private member’s bill, which, in her opinion, would level the playing field between independent insurance companies and Canadian banks. The insurance brokerage industry has previously complained to the federal government as well as lobbied MPs about this issue.

While some members of the insurance brokerage industry are welcoming these proposed changes, others fear these new rules will impede Canadians from being able to make informed choices due to insurance information being restricted. The internet affords Canadians the opportunity to quickly and efficiently be able to compare insurance quotes, the type of insurance products offered, etc, without being pressured by a sales agent. Currently people can ‘surf the net’ and research the different types of insurance that are available, and can compare the not only the costs of available insurance policies, but to also compare the different types of policies available. This allows people to benefit from having the most information available in which to make their decisions. It also allows for people to become aware of different types of insurance which they may not have known was available. As well, a healthy competitive market means that the consumer benefits from no one specific company being able to monopolize the industry.

It is important for anyone contemplating purchasing insurance to do their own independent research and compare quotes as well as what those specific policies offer. While it may make sales a little more competitive for the insurer, it allows for the consumer to benefit.

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