What LFG is doing can't be legal

I paid into a private disability policy with Jefferson-Pilot, Lincoln National for 25 years. It was understood when I took out the policy that I was going to retire from my Law Enforcement job due to injuries sustained in a high speed chase 3 years before. My retirement would be so low that I would have to keep working in light construction, which I had always done. I could not ride in a police car for 12 hour shifts, or do other strenuous activity, such as arresting suspects, etc. I listed on the application that I was doing construction work. I developed severe carpal tunnel in both hands, which came on over a long period of time. I was tested by a Neurologist, and had surgery on my right hand a week later. I filed for disability with the insurance company, Lincoln National. I had gone by my employers a few times to explain what needed to be done to the people I lined up to do the work I used to do. They used this to deny my claim, which I suppose they could do. When I appealed, I told them that I had not done any work since May 29, 2014 and intended to re-apply, since after 2 months of therapy, I still have a great deal of trouble with my right hand, and can not have surgery on the left until the right is functional. I was advised they would probably turn me down because I am an elected official (Town Councilman), in the small town where I live, and get a $1,300 per year allowance for expenses, which they consider income. They also subtracted the losses of my company, which is a C corporation from my income to claim I did not make anything last year. I intend to hire an attorney, as I do not believe what they are doing is legal.