Can the insurance company take my Canada Pension Plan benefits?
Long-term disability (LTD) insurers usually include an agreement in their policies requiring a plan member who is receiving benefits to apply for CPP disability benefits. If the application is successful, the agreement usually gives the insurer the right to deduct the awarded CPP disability benefits from the LTD benefits payable to the plan member.
How much will be insurance company pay?
If your plan allows for the insurer to offset the CPP disability payment, your LTD insurer will deduct 100% of the monthly CPP disability benefit from their monthly payment to you. Say your LTD disability payment amount is $2000 a month, and you are awarded $1200 per month from the CPP, your insurance company will offset what they have to pay with the $1200 from CPPD. Your LTD payment will now be $800, while the other $1200 will come from the government.
Do I need to pay my insurance company my Canada Disability Benefits?
This will depend on your specific policy. Generally, if you’ve signed the agreement, usually called a Direction to Pay form, then there is nothing you must do other than to apply for CPP disability benefits. Your insurer will most likely deduct your CPP benefit amount from your monthly insurance payment. As always, refer to the wording in your disability benefits policy.
You may be paid arrears by Canada Benefits Disability- this means payment for months in the past that you were owed but were not paid Canada Pension Disability benefits. The insurance company is likely to take (or request payment) for a large portion of the arrears because they would have effectively overpaid you during those months.
What happens if I refuse to apply for CPP disability benefits?
Policies can contain sub-clauses allowing the insurance company to estimate the amount of the disability benefit you could potentially win from the CPP (even if you haven’t applied or won!) and deduct this hypothetical amount from your actual LTD benefits payments. This means you would be getting a reduced rate without the added benefit of the CPP disability payments
Even worse, your plan may allow the insurance company to cut your benefits off if you refuse to apply for benefits. You may be found non-compliant with the policy and left without any compensation for your disability.
What if I’m not sure if I signed one of these agreements?
Unsure of your policy terms, stipulations applicable to your LTD plan, or remain unsure what you may have to do to ensure your benefits continue? The insurance company will expect that you are familiar with your policy. If you aren’t, we can help.
Questions about a disability benefits claim?
Jeff Mitchell is an experienced Long Term Disability Lawyer who has successfully advanced his client's interests in Toronto, Ontario, and the rest of Canada. To book your free consultation, call toll-free:1-833-633-3585 or jeff@fdlawyers.ca, and tell us more about your disability claim and will tell you how we can help you.
