Health insurance implications for boom in self-employed Canadians

by David Keelaghan30 Sep 2016
A study released by RBC this week revealed that Canadians are much more open to starting their own businesses than ever before. With the economy not offering much reassurance when it comes to long-term job stability, an increasing amount of people are deciding they want to be masters of their own destiny, at least when it comes to their career.

What implications does this trend have for the health insurance industry, however?  

Craig Donovan, director, Individual Health Sales with Great-West Life believes that many in the growing ranks of the self-employed are neglecting their health coverage.

“There are a lot of people that are self-employed in Canada – it’s a growing marketplace,” he says. “But a number of these people are in situations where they do not have health and dental coverage that a typical employed person may have.”

RBC's Small Business Poll showed that 79% of Canadians believed being self-employed was less risky than working for someone else. As a result, 60% have considered starting their own business, with 92% of that number saying they would start a business to have control over their career.

Jason Storsley, VP Small Business at RBC, explains some of the takeaways of the study.

“In a lot of ways it’s probably never been easier to start your own business,” he says. “There are government programs in place and also the power of the internet makes a big difference. The tools and information available on the internet – you can build a business plan, make a network of trusted advisors and professionals, lawyers, accountants, bankers: that has never been easier.”

Another factor contributing to this phenomenon is the oft-discussed plight of millennials – a generation that is overloaded with degrees, but must compete in a much more challenging job market than their forebears. 
“Among millennials you hear a lot about people coming out of university and not being able to find a job in their area of expertise,” says Storsley. “These people are more inclined to start a business.”

Should they take that plunge, then having health insurance should be an immediate concern, according to Great-West Life's Craig Donovan.
“A lot of people might wait until later in life when their health changes,” he says. “It’s not like auto insurance where you have to have it in case you have an accident – there is nothing mandating having health insurance.”

This means that younger workers, already less financially secure than their parents, tend to go without. This is a big mistake in Donovan’s view, who makes the case that when it comes to purchasing health coverage, younger is better.
“For the self-employed, the average purchase age is about 39 years old,” he says. “My advice to self-employed people is to buy health insurance when they are younger and healthier because that will affect the underwriting.”
Another major factor to consider is the rising cost of healthcare. While the United States leads the way globally when it comes to sky-high prices, Canada is following suit in many ways. So with drug costs and medical expenses in a constant upward trajectory, having coverage is increasing in importance all the time.
“The fact that healthcare costs are going up underscores the importance of buying these products in the first place,” says Donovan. “In the Canadian individual health sales market, sales are increasing significantly, so to me that suggests that self-employed people are realizing it’s a way to mitigate risk.”

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