Individual long-term disability benefits are not subject to income tax if the policyholder pays the premiums in full. Benefits are taxed, however, if an employer pays for the disability insurance coverage.
Publications and Resources
Private Long-Term Disability Income Insurance. This fact sheet explains how private long-term disability income insurance offers paycheck protection and complements the safety net provided by the Social Security Disability Income program. (2018)
Disability Income Insurance: Financial Protection for You and Your Family. This guide outlines the features and costs of individual disability income insurance and offers tips and a checklist on buying the right policy for you. (2014)
Protection for the Unexpected. A serious illness or injury can harm more than your health--it can have an impact on your ability to work and meet your family's living expenses. This article explains how disability income insurance can help you avoid depleting your savings.