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Can My Insurance Company Deduct My Gross CPP From My LTD Benefit?

My insurance company is deducting my Gross CPP from my net after tax LTD benefit. Can they do that?
Disability Benefits - Question 32
Most group LTD insurance policies allow insurers to deduct the gross amount of Canada Pension Plan disability benefits, even though the tax treatment may be different. The way the deduction should work though is as follows. Assuming you have an LTD benefit of $2,500 per month (taxable and gross) and your CPP disability benefit is $1,000 per month, the net amount you should receive is $1,500 (and then tax should be deducted). The $1,000 should not be deducted from your net after tax LTD benefit. It may not make much of a difference in terms of actual dollars you receive, but that is the correct way for the deduction to be made.
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This searchable database contains information about disability, critical illness and life insurance claims, and what you can do if you are denied or cut off of your benefits. It is a collection of the most common questions we receive from our clients. General answers have been provided by our lawyers.