If the insurance company deducts their estimate of CPPD (eg. $500) and then CPPD turns out to be $600/month, do they expect to be paid back in a lump sum or do they cut off future payments until the difference is paid off?
It depends on the wording of your group contract (the master policy). My husbands says any over payment must be paid back within 6 months. As we are suing his Insurer for estimating his CPP-D and for misrepresenting his policy that he had to apply while still in the own occ. definition-I might purchase a draft payable to GWL but hold onto it until the court decides.
That way I have technically set aside and paid them (not used the funds) but can cash back into my account if the court rules in favour of my spouse.
Situation: A. is approved for CPP-D and gets retroactive payments in the amount of $10,000. A.'s insurance benefits are $1,000/month. There is nothing in A.'s policy about paying off the CPP-D back payments to the insurer within a limited time frame. Then A. decides to tell the insurer that he is not able to return the money right away and requests the insurer to deduct the owed amount from the future payments.
Questions: What will happen next? Is this the right thing to do? What is the insurer’s reaction? How does the situation affect A.'s credibility if the case happen to go to court one day?
The back payment is owed to the insurer. You likely have not got the section on claim provisions and over payments.
I think it would affect your credibility if you knew the funds belonged to the Insurer and withheld them unless there is a clause in the policy that allows a delay or how over payments are handled.
There is a court decision which permitted the over payment to be deducted monthly from the LTD-but that is a unique case.
If you have no assets to seize I know that some Insureds spend the money out of ignorance and have them claimed bankruptcy on owing the money to the Insurer. Since the bankruptcy wrote off the debt the Insurer had to resume paying the claimant. Doing this knowingly though would be likely be fraud.
I thought they would be more motivated to keep you on ltd if they can only deduct the owed money from future payments.
Will depend on your insurer and policy wording. Normally insurers demand / expect to be paid back immediately out of the lump sum CPP retroactive payment you get from Service Canada.
David Brannen
Disability Lawyer with Resolute Legal
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