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Why is my Long Term Disability Insurer insisting that I apply for CPP Disability Benefits?

Lots on people who are applying for Long Term Disability insurance benefits; or who are receiving Long Term Disability benefits want to know why their insurance company is asking (or demanding) that you apply for Canada Pension Plan Disability Benefits (CPP-D).

What does one set of benefits have to do with the other? Why is my long term disability insurer so adamant that I apply?

All of these are great question and as personal injury lawyers who handle a lot of long term disability claims; we see them all of the time.

For starters, contained in the very very fine print of each and every single long term disability insurance policy that we have seen is a provision which states something to the effect that:


Other lnoome benefits means those benefits as follows:

1. The amount for which the insured is eligible under Workers Compensation
Act or similar law.
2. The amount of any disability or retirement benefits under The Canada Pension
Plan, The Quebec Pension Plan, or any similar plan or act, as follows:
a. disability benefits fer which the insured is eligible;
b. retirement benefits received by the insured.

3. Where permitted by law, the amount of any disability income benefits. wh1ch
the insured receives under government mandated motor vehicle
insurance law in Canada
4. The amount of any disability income benefits for which the insured is eligible
under any compulsory benefit act or law.
S. The amount of any disability income benefits for which the insured is eligible
any other group insurance plan;
b. any government retirement plan.

If you are eligible for any of the income amounts above and do not apply for them, we
will still consider them part of your income. We can estimate those benefits and use
those amounts when we calculate your payments.


During your total disability, you must make reasonable efforts to:

obtain benefits that may be available from other sources.

If you do not, Sun Life may hold back or discontinue benefits.

All of this may sound scary, and it certainly is. The insurance company ash the right to make estimates on benefits to which you are entitled and deduct your benefits based on their own in house estimates. If during your disability you fail to apply for benefits to which you are, or may be entitled the insurer has the right to hold back or to discontinue said benefits. This is certainly not something which your every day insured signed up for when opting to purchase long term disability insurance. It’s also not what they bargained for when their employer told them that they’d be entitled to received long term disability benefits as part of their benefits package at work.

It’s important to keep in mind that long term disability benefits are not meant to put the claimant in a better financial position than they were prior to the disability. In fact, most policies provide for benefits which are around 65%-70% of pre-disability earnings. That means that your long term disability benefits weren’t even made to make the disabled claimant whole!

If a long term disability policy paid you 70% of your pre-disability income, PLUS the disabled party received CPP Disability, plus received WSIB; chances are they would be taking in more money while on disability than they would had if they were working. This just sends the wrong message that you can earn more while on disability versus earning an income while working.BRIAN-GOLDFINGER-RAPTORS-PODCAST-REPUBLIC-300x169

It’s for these reason that long term disability insurers contain these sort of set off provisions in their insurance policies. It’s for these reason that insurance companies insist that you apply for those collateral disability benefits to which you may (or may not) be entitled. On virtually every policy our lawyers have seen, these policies contain provisions which not only require that the insured apply which we have seen above; but also contain provisions that the insurance company is entitled to a dollar for dollar set off for any disability income which the insured takes in.

These set offs ensure that even when insurance companies have to pay out on long term disability policies, that they aren’t losing as much money as they would in the event that they weren’t entitled to these set offs. At the end of the day, insurance companies are largely privately held, or publicly held multi nationals who exist to report a profit. The more money which insurer have to pay out in benefits, the less money which they get to report in profits. So every dime which the insurance company doesn’t pay out to you in benefits, is a dime saved.

And if you don’t act upon that denial, nothing will change. Some denied claimants try then appeal route. Very few cases we have seen get overturned on appeal. Think of it. The appeal is an internal one with people employed by the insurance company deciding on your case. It’s a mechanism meant to give an air or impartiality, fairness and non-bias. If an appeal mechanisms weren’t there, people would cry foul that it’s not fair and that the system is rigged. But the insurer can always point to their internal appeal mechanism as an indicator that they care and have created as fair a system as possible for claimants.

While this may be the appearance, it’s far from reality. All the internal appeal system does is create a pattern of denials which are later used against a claimant. If one adjuster denies a claim; followed by another adjuster who then denies the claim on appeal; followed by another adjuster who denies the claim on appeal #2; it begs the question: can all of these adjusters be wrong? It creates a very compelling argument which can be difficult to overcome at trial. The system of appeals also hopes to grind down a claimant, giving them a false sense of hope that the decision to deny will be overturned; only to see that hope being taken away from the claimant in the form of yet another denial. The thought process is if the claimant has been denied so many times, perhaps they’re so worn out by the process that they won’t reach out to a personal injury lawyer to fight their case. And when that happens, the insurance company wins. Don’t give up hope. Don’t let the insurance company boss you around. Get the right tools to fight your case the right way, the first time instead taking a ride on the appeal carousel.


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