When you are looking for money in a crisis, your life insurance policy may never think of you. You bought it to look after your family when you're not there, but you're still here and looking for ways to pay your bills. In some cases, a permanent life insurance policy, such as the whole life, could provide the emergency money you need. Taking money from your policy could increase your tax burden and you risk leaving your family short of funds if you die. But if you're having financial problems, touching the cash value of an entire life insurance policy could be a reasonable option. NerdWallet Guide to COVID-19 Get answers on stimulus checks, debt relief, changing travel policies and managing your finances. Does life insurance have cash value? Not all life insurance policies have hidden funds inside. To get money from your life insurance, it must be a permanent policy, like all life, that has taken the time to build a cash value. Life insurance is not valid. It is typically the most convenient type of life insurance, but the main tradeoffs are that the lifespan lasts for a limited time and has no cash value. It is not possible to withdraw money from this type of policy. Permanent life insurance often costs much more than long-term life, but part of the premium goes into an investment account that you may be able to touch. Whole life insurance, sometimes also called ordinary or simple life insurance, is the most common type of permanent policy. Other variations, such as universal life, variable universal life and indexed universal life, may also have a cash value. If your policy is relatively new, it is unlikely to still have much cash value. Building cash value is like growing a savings account with small deposits over time. Typically you will have to pay the rewards for several years before there is enough cash value to be useful. Also, keep in mind that the cash value of your policy can be much lower than the total of the premiums you paid or the amount of insurance you purchased. If the cash value of your entire life policy becomes undisturbed, it should eventually reach the benefit if the policy dies, but this may not happen until you are 100 years old. Four ways to take advantage of the life insurance cash value touch it for everything you need, but taking money from your life insurance policy is a serious decision. The details differ from one policy to another, so be sure to read the contract or check with your agent before acting. Here are four options to consider: waiving the policy You can cancel your life policy entirely and receive the redemption value, which is the cash value minus any commissions. If you choose this option, you will no longer be covered by the policy and your family will not receive compensation in the event of death. Depending on how long you have the policy, you may pay a penalty for cashing in advance. And if your payment is higher than the premiums you paid, you may have to pay income tax for that income. Giving up the policy may not be a good idea unless you are sure you no longer need life insurance to provide for your family after death. Making a withdrawal You can typically withdraw part of the cash value in a full life policy without canceling the coverage. Instead, your heirs will receive a reduced death benefit when you die. Generally you don't owe any income tax for withdrawals up to the amount of premiums you paid in the policy. This option can also be called a partial cash redemption, as you are giving up part of your coverage. Tomorrow from the policy Many policies allow you to borrow against the cash value. Borrowing against a life insurance can be easier than getting a loan elsewhere because there is no credit check and a flexible repayment schedule. When you take out a life insurance loan, you are generally expected to repay it with interest at some point. If you die before repaying everything, the amount that is deducted from you is deducted from the benefit paid to your heirs. Cover your premium If you need money to pay your bills and one of those bills is the life insurance premium itself, your cash value may come in handy. You may be able to skip paying instant premiums on your entire life insurance policy. Instead, you can use the cash value to cover the rewards for a while, keeping your policy safe while stormy.