Read the Fine Print!

The Canadian Life and Health Insurance Association uses bold typeface to advise potential buyers of private insurance: “Read your contract!” While the warning is sound advice in general, it was meant to apply specifically to disability insurance plans. This paper describes the interface between private insurance and the Canada Pension Plan (CPP). The CPP was introduced in 1966 to protect Canadian workers against the loss of income due to retirement, severe and prolonged physical or mental disability, or death. In addition to this near-universal protection from the public pension system, some workers have access to additional private disability insurance coverage through a group plan or individually purchased plan. This paper describes why workers would seek extra disability coverage through private insurance. Despite its importance, problems can arise around the interaction of public and private programs. Read the Fine Print! explores one of these problems: the concerns related to the fact that many insurance companies include as household income the CPP benefit paid in respect of the children of disability beneficiaries. The paper concludes that there is a need for improved dialogue on this issue. There is also a need for greater scrutiny of insurance practices by both governments and consumers.

ISBN – 1-894598-58-X