Total Permanent Disability (TPD) insurance is a type of insurance policy that provides 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 designed 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, any occupation, and activities of daily living. The first type of TPD insurance covers the policyholder if they are unable to work in their own occupation, while the second type covers them if they are unable to work in any occupation for which they are suited by training. The third type of TPD insurance covers the policyholder if they are unable to perform a certain number of activities of daily living, such as bathing, dressing, and eating.

TPD insurance can be held personally or in superannuation. When TPD insurance is held in superannuation, 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.

When deciding if you need TPD insurance, and how much, think about the expenses youll need to cover if you were permanently disabled and unable to work. These could include living expenses for you and your family, repaying debts such as a mortgage or credit card, medical and rehabilitation costs, and savings you want for retirement. It is important to note that TPD insurance payouts are generally not tax-deductible and claim payments are not taxable when taken for personal protection. However, if TPD insurance is held in superannuation, the claimant who withdraws the proceeds of their account superannuation account balance, to which a TPD benefit is usually credited to, is taxed.