Total Permanent Disability (TPD) is a terminology used in the insurance sector. It denotes a condition in which the victim due to injury or sickness is unable to work in the occupation for which he is suited by education, training or experience. Any person or a group of persons can insure themselves against such contingency. This insurance forms a part of workers’ compensation. This benefit can also be a part of the life insurance coverage.
A permanent disability is incurred for life time from which the insured is unlikely to recover at all. However, notion of permanent disability varies though slightly even across different insurance companies. Typical definition of total permanent disability covers loss of both eyes, arms or legs and absence from work for minimum six months at a stretch due to sickness or injury without any reasonable expectation of returning to work.
Under workers’ compensation law, each state or jurisdiction has its definition of permanent disability.
TPD insurance is usually designed to replace 45 to 60% of a person’s gross total income on a tax free basis in case he is permanently disabled by sickness or injury from earning the same.
However, TPD insurance should not be confused with income protection insurance since the insured must become permanently disabled instead of just absence from work for a protracted period for being eligible to the claim of TPD benefit.
