is insurance settlement tax free?

I have a private disability policy. I became disabled and received benefits for about a year before they were terminated. The benefits were tax free since I had never deducted my premiums. I have appealed their decision to terminate and will likely sue. If I receive a settlement from the insurance company either from a lawsuit, or to close this claim and sell my policy back to them, is that money taxable?

If you paid the entire cost of the plan, you do not report as income ANY amounts you get from the plan for your disability. So if you sue the insurance company, amounts you get for the disability benefits would be non taxable, but any interest or punitive damages you get would be taxable.