What I mean by that statement is that in my opinion insurance companies should not attempt to force people to apply for CPP before the 2 year change of defintion (COD). To say they can’t, is probably not a good use of language on my part – they can always do what they want and there is no hard and fast legal rule on this. It depends on the policy wording regarding their power to estimate and deduct possible future CPP disability payments. In most policies they have broad power to estimate and deduct CPP disability whenever they see fit, so that means they often can enforce this before the COD. However, in some policies they do not have this luxury of favourable wording, so in those cases I believe they have no legal right to use financial threats to force a person to apply for CPP early.
Personally, I think it is sleazy and in bad faith for an insurance company to force a person to apply for CPP before the COD, when the insurance company knows for a fact is it terminating payments at the change of definition. To me that is bad faith. In those situations, this scheme is just a cash grab on their part. When I see this scheme at work in a case we are doing, we will highlight this bad behaviour as part of the lawsuit. If we see they have done this with no legal authority form the policy, then we sue them for bad faith and mental distress.
At least twice I have seen a situation where the insurance company tried to force the person to apply for CPPD (and sign the irrevocable direction to pay) AFTER they have already notified the person the LTD payments will terminate at the COD!!! That makes it almost too easy to sue them for bad faith.