Individual disability insurance is not taxable if paid for with personal funds. If you pay your premiums with a personal account, you are using after tax dollars. At the time of claim, your disability insurance benefit will be paid tax free.
If your employer is paying the premiums on either your individual policy or through a group disability policy, your benefits paid to you will be taxable.
If you are a business owner and pay your individual disability benefits through your business and deduct the premiums, the benefits will be taxable. If you deduct your premiums on a business disability insurance policy, the benefits will be taxable, but will be offset by the deductible expenses you are using the benefits for at the time of claim.
For more information about disability insurance and taxes, contact Set for Life Insurance today.