The interplay between CPP disability benefits and LTD contracts

People who receive long-term disability benefits should be aware that LTD providers often require, as part of the LTD contract, an application for CPP Disability Benefits to be made. This is dealt with under the “Offset” or “Coordination of Benefits” section of most group  LTD Policies.

The purpose of these provisions is to determine if the LTD provider can reduce or eliminate the amount the LTD plan has to pay out. The reason insurers do this is to avoid something called “double recovery” – they do not want an insured person receiving double the amount of benefits for the same disability and to keep the costs of such plans to a minimum for insurers and their policy holders.



CPP Disability Benefits are a federal benefit that are available to employees who have contributed regularly to the Canada Pension Plan. CPP Disability Benefits are payable to the insured person if he or she has contributed to CPP for a minimum of 4 out of 6 years prior to suffering a disability. A minimum qualifying period has to be met, which translates into a date the the employee must prove disability by in order to be able to qualify. Your CPP Disability Benefit is determined by the amount of contributions an employee made during his or her working life.

If a person is receiving LTD benefits is approved for CPP Disability Benefits, his or her LTD monthly benefit would be recalculated to reflect the amount received from CPP. The CPP monthly benefit is the lesser amount received and is then deducted from the LTD benefit, and then the LTD provider will issue monthly payments to reflect the difference payable.