Instead of paying monthly or periodic life insurance premiums, some plans may allow you to pay the entire cost beforehand. The upfront payment is a type of investment as it can accumulate interest. The accrued value is income that the IRS may tax depending on how and when you use it. For example, if you use the interest toward a premium payment, the used amount will be taxed. The same is true for any portion of the interest you withdraw for any other use.