DEFINITION of 'Total Permanent Disability (TPD)'

A condition in which an individual is no longer able to work due to injuries. Total permanent disability, also called permanent total disability, applies to cases in which the individual may never be able to work again.

BREAKING DOWN 'Total Permanent Disability (TPD)'

Total permanent disability may involve an individual’s loss of the use of his or her limbs, with the injuries preventing the policyholder from being able to work in the same capacity as he or she had before the injury. If the policyholder retires or leaves the workforce for any reason other than the injury then coverage may be stopped.

Insurance companies classify disability according to the amount of work that an individual is able to perform. Temporary disabilities prevent an individual from working full-time (called temporary partial disability) or at all for a period of time (called temporary total disability). Permanent disabilities prevent an individual from being able to work full-time for the rest of his or her life, referred to as permanent partial disability, while total permanent disability means that the individual will never work again.

Individuals may insure themselves against total permanent disability through a disability policy. The amount of the benefit is typically a fixed percentage of the policyholder’s average wage, or, in some cases, the average wage of individuals in a geographical region. There is no limit on the number of weeks that an individual can receive benefits if he or she becomes permanently disabled.  

In some cases the law may allow an individual on total permanent disability to engage in business activities if the benefit provided from a disability policy plus the wages earned from additional work does not pass a certain threshold. Students with loans may have their loans discharged under certain conditions if they face total permanent disability, provided that the injury is expected to last a minimum period of time or result in death.

RELATED TERMS
  1. Any-Occupation Policy

    A term used in the insurance industry to refer to a specific ...
  2. Elderly and Disabled Credit

    A non-refundable tax credit available for taxpayers who are aged ...
  3. Disability Insurance

    A program managed by the Social Security Administration that ...
  4. Disability Insurance Trust Fund

    An account within the Social Security Trust Fund used to pay ...
  5. Pre-Disability Earnings

    The amount of qualifying income that a disability insurance policyholder ...
  6. Residual Benefit

    A benefit provided by a disability insurance that provides the ...
Related Articles
  1. Financial Advisor

    How to Help Clients Who Have Become Disabled

    Disability can strike a client any time. Advisors should make sure clients are adequately insured against this risk and know what benefits are available.
  2. Insurance

    Protecting Your Income With Disability Insurance

    For a high-earning professional, income protection is essential. Here's what to look for in a disability insurance policy.
  3. Managing Wealth

    Top 6 Features Of A Great Disability Policy

    Many people consider buying life insurance, but few think to prepare themselves from long-term illness or disability. Find out how to shop for disability insurance and protect yourself from financial ...
  4. Taxes

    The New Tax-Free Savings Accounts For the Disabled

    Due to the Achieving a Better Life Experience (ABLE) Act, many people with disabilities will have an easier time financing their lives, starting in 2016.
  5. Financial Advisor

    Disability and Business Overhead Coverage for the Self-Employed

    What every small business owner or professional needs to know about individual and business overhead disability income insurance plans.
  6. Insurance

    Group and Individual Disability Insurance: What You Need to Know

    What you need to know about group and individual disability income coverage.
  7. Financial Advisor

    How Do Workers' Compensation Benefits Work?

    What you need to know about Workers' Compensation benefits.
  8. Financial Advisor

    Disability and Retirement: How to Be Prepared

    Here's how financial advisors can help clients with disabilities arrive at the best solution over the long term when it comes to planning for retirement.
  9. Financial Advisor

    Top 3 Financial Steps to Take on Disability

    Going on disability can be a stressful time financially. Here are 3 steps to take on disability to help protect against significant financial blowback.
  10. Insurance

    5 Things You Need to Know About Disability Insurance

    It's important to understand the true value of your ability to earn income, and to make sure it's protected.
RELATED FAQS
  1. What are the maximum Social Security disability benefits?

    The average Social Security disability benefit amount for a recipient of Social Security Disability Insurance (SSDI) in 2 ... Read Answer >>
Hot Definitions
  1. Collateral

    Property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan ...
  2. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
  3. Racketeering

    A fraudulent service built to serve a problem that wouldn't otherwise exist without the influence of the enterprise offering ...
  4. Aggregate Demand

    The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.
  5. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  6. Blue Chip

    A blue chip is a nationally recognized, well-established, and financially sound company.
Trading Center