Is Disability Insurance Earned Income? 
Disability can be purchased in basically two ways : non deductible and deductible premiums . The conventional disability insurance policy is purchase with after tax dollars , so the benefits generated at the time of the claim are tax free . Tax deductible disability premiums need to qualify under the terms of the IRS , but if they qualify for tax deductible status , then they 're benefits at claim are taxed as ordinary income . 