Are supplemental insurance settlements taxable if you paid your premium with after tax dollars?

Would you please try to explain further or clarify what you mean by a "settlement?"   Are you actually referring to receiving disability benefits for the illness?  Did you pay into a disability insurance plan with your own funds instead of having disability insurance that was paid for by your employer?

It’s not disability.  It’s critical illness supplemental insurance, like Aflac.  My employer holds the premiums out of my check with after tax dollars, but they don’t contribute to the premium.  It’s 100% funded by me.  I think I don’t have to pay taxes if I paid the premium with after tax dollars.