Okay, so I used a little poetic license in the title, which I borrowed from the Latin phrase, “Carpe Diem.”  DIAM stands for Disability Insurance Awareness Month, which will be “celebrated” once again in May.  Life and Health Insurance Foundation for Education (LIFE) does a great job every year of  reminding us how important disability insurance is for most Americans.

It’s interesting to note that the term “Carpe Diem,” which literally means “Seize the Day,” was originally used in a Latin poem by Horace.  However, what Horace actually used the term to mean was “enjoy, make use of.”   In the poem, Horace used the phrase as part of the longer “Carpe diem quam minime credula potero” – “Seize the day, trusting as little as possible in the future (Wikipedia).”

How appropriate then is the expression I used to celebrate  DIAM.  Enjoy the day, but as you trust as little as possible in the future, protect your future with a good disability insurance policy.  Educate yourself about how great the odds are of becoming disabled during your working years.  Protectyourincome.com is a great place to learn about this very important coverage, as is the DIAM information at the LIFE website www.lifehappens.org/diam.

Carpe DIAM!!!

When my clients ask me whether or not disability benefits are taxable, my answer is simple – if the premiums are paid with after tax dollars, the benefits are NOT taxable.  If the premiums are paid with pre-tax dollars, the benefits are taxable.

Most individuals purchasing disability insurance don’t have a choice, as for an individual, the premiums are always paid with after-tax dollars.   A corporation purchasing disability for employees can deduct the premiums, so the benefits paid to the employees are taxable.

This information should be used as a general guide.  You should always consult with your accountant to determine the tax consequences as outlined above.