A life insurance policy that has cash value offers several options for allowing you to tap into its value while you’re still living; Withdrawing money from the policy Surrounding the policy Borrowing against the policy Using the policy to pay your premiums.    “You might be allowed to withdraw money from a life insurance policy with cash value on a tax-free basis,” says John Egan for Experian. “However, if the sum you take out surpasses the amount of money you've built up as the cash value under your policy, you'll be required to pay income taxes on that money.”