Total Permanent Disability ''(TPD)'' is a phrase used in the

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

industry and in

law Law is a set of rules that are created and are enforceable by social or governmental institutions to regulate behavior, with its precise definition a matter of longstanding debate. It has been variously described as a science and as the ar ...

. Generally speaking, it means that because of a sickness or

injury Injury is physiological damage to the living tissue of any organism, whether in humans, in other animals, or in plants. Injuries can be caused in many ways, including mechanically with penetration by sharp objects such as teeth or with ...

, a person is unable to work in their own or any occupation for which they are suited by

training Training is teaching, or developing in oneself or others, any skills and knowledge or fitness that relate to specific useful competencies. Training has specific goals of improving one's capability, capacity, productivity and performance. I ...

education Education is the transmission of knowledge and skills and the development of character traits. Formal education occurs within a structured institutional framework, such as public schools, following a curriculum. Non-formal education als ...

, or

experience Experience refers to Consciousness, conscious events in general, more specifically to perceptions, or to the practical knowledge and familiarity that is produced by these processes. Understood as a conscious event in the widest sense, experience i ...

. An individual or group of individuals can insure themselves against it through a

disability insurance Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for completion of core work func ...

policy, as part of a

life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typical ...

package or through

worker's compensation Workers' compensation or workers' comp is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her emp ...

insurance.

Definitions of permanent disability

Ballentine's

Law Dictionary A law dictionary (also known as legal dictionary) is a dictionary that is designed and compiled to give information about terms used in the field of law. Types Distinctions are made among various types of law dictionaries. Differentiating fact ...

defines a permanent disability is one that "will remain with a person throughout" his or her lifetime, or he or she will not recover, or "that in all possibility, will continue indefinitely."

Insurance companies Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect ...

often have slightly different definitions of what determines permanent disability. However typical definitions would include: * Loss of two of: Eyes, Arms, or Legs. * Absence from work for six months due to an accident or illness, without expectation of returning to work.

United States

Under

no-fault insurance In its broadest sense, no-fault insurance is any type of insurance contract under which the insured party is indemnified by their own insurance company for losses, regardless of the source of the cause of loss. In this sense, it is similar to f ...

law,

New York New York most commonly refers to: * New York (state), a state in the northeastern United States * New York City, the most populous city in the United States, located in the state of New York New York may also refer to: Places United Kingdom * ...

defines significant injury as including a ''permanent loss of use''.New York Insurance law, section 5102 (McKinney's Laws).

Australia

Total and Permanent Disablement Insurance is designed to provide a lump sum benefit to the life insured in the event of a medically diagnosed event that renders the claimant unable to work again. TPD Insurance is generally used to cover debts and the ongoing living expenses of an individual to reduce the ongoing financial burden of loss of income. There are three main types and definitions of TPD Insurance: * Own Occupation TPD - the claimant must be unable to work in their own occupation ever again. * Any Occupation TPD - the claimant must be unable to work in their occupation and also any occupation that they are suited to via education, training or experience ever again. * Non-Occupational TPD - the claimant must be unable to conduct 2 of 5 activities of daily living. The Own Occupation definition is generally considered to provide the greatest level of protection, with the Non-Occupational TPD requiring the greatest level of disablement before a claim will be considered. TPD Insurance in Australia can be owned and paid for from

superannuation A pension (; ) is a fund into which amounts are paid regularly during an individual's working career, and from which periodic payments are made to support the person's retirement from work. A pension may be either a "Defined benefit pension pla ...

accounts. When TPD Insurance is held in Superannuation, the 'Any Occupation' definition is normally offered as the level of disablement required by Superannuation Law is based on 'Any Occupation.' TPD Insurance when taken for personal protection is generally not tax deductible and claim payments are not taxable. When TPD Insurance is held in superannuation however a claimant who withdraws the proceeds of their account superannuation account balance, to which a TPD benefit is usually credited to, is taxed. The maximum level of cover normally available with one insurer in Australia is generally $3 – $5 million with the oldest entry ages varying between 55 - 62.

Risk Assessment of TPD Insurance in Australia

TPD Insurance is normally underwritten on application and factors such as medical history, family history, past times and unusual occupational risk factors can result in a policy being offered on with exclusions or an increased premium. For higher sums insured, additional medical verification including blood tests and reports from doctors is usually required.

Claiming Total and Permanent Disability insurance in Australia

Having a claim for Total and Permanent Disability insurance approved can be a cumbersome process for the insured. In Australia, the vast majority of TPD insurance policies are provide by superannuation funds. These funds offer products that are typically more basic than what can be found in the Retail Insurance space. Generally, TPD provided by super funds will require that you have been off work for a period of at least 6 months before they will consider a claim. After this period of time has been met, the claimant will need to provide evidence that two of their treating medical practitioners have certified that the claimant will be unable to ever return to work in any occupation for which they are suited by way of education, training and experience. The process of determining this involves a number of aspects with many claimants seeking professional advice by way of Financial Advisors and Lawyers.

The Netherlands

This insurance is mainly purchased by self-employed professionals, it is also called 'one person company'. This insurance would cover maximum 80% of the income after the accident. In Dutch, the total permanent disability insurance is called Arbeidsongeschiktheidsverzekering.

Distinctions

TPD differs from

income protection insurance Income Protection Insurance (IPI) also known as loss of earnings insurance is an insurance policy paying benefits to policyholders who are incapacitated and hence unable to work due to illness or accident. This is typically a replacement for lost ...

in that: * TPD pays out a lump sum of a policy-specified amount, whilst

is designed to replace income and pays out a specified percentage of pre-disability income (e.g. 75%) on a regular basis (e.g. monthly) * the insured person must be totally disabled on a permanent basis for the insurer to pay out, rather than just totally or partially unable to work.

References

Common Types of TPD Claims in Australia

External links

{{DEFAULTSORT:Total Permanent Disability Insurance Insurance law Types of insurance