Have been on LTD just over one year and my insurance company is advising me that I must apply for CPP Disability (which may or may not be approved). Is this correct?

Unfortunately, under most modern LTD policies, there are terms requiring you to apply for CPPD, yes. To be certain of what your duties are though, you can request a copy of your policy - or at least those terms - from your case manager/adjuster.