Final answer:
Contract provisions in disability insurance determine whether benefits are taxed or not.
Explanation:
Contract provisions determine whether disability insurance benefits are taxed. The specific terms outlined in the insurance contract dictate how benefits will be taxed, including whether they are taxable or tax-free.
For instance, if a disability insurance contract explicitly states that benefits are taxable as income, then they will be subject to taxation. On the other hand, if the contract states that benefits are not taxable, then they will be received tax-free.
Contract provisions play a crucial role in the taxation of disability insurance benefits, impacting how the benefits are treated from a tax perspective.
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