Depending on the type of life insurance policy you have, here are four ways you may be able to access its cash value:

Make a withdrawal
Take out a loan
Surrender the policy
Use cash value to help pay premiums

Withdrawing money from your cash value policy¹

You may be able to make a tax-free withdrawal from your permanent life insurance policy. But, if your withdrawal exceeds the amount you've paid so far into the cash-value portion of your policy, it'll be taxed as income. Also, keep in mind that withdrawing your cash value funds reduces the death benefit that's paid out to your beneficiaries when you pass away.

Taking out a life insurance loan¹

You can typically borrow up to the cash value on your life insurance policy. This life insurance loan may include the portion of your paid premiums that have been designated for the cash value account, along with any accrued interest those funds have earned. According to the American Institute of CPAs, the life insurance loan isn't considered taxable income. If you die before you repay the loan the outstanding amount is subtracted from your death benefit. Regardless, until you pay the loan back, your debt is accruing interest, which can decrease your policy's potential death benefit.

Surrendering your life insurance policy for its cash value

A surrender is essentially a cancellation of your policy (you'll no longer be covered by life insurance). When you surrender your life insurance policy, your equity is the amount you've paid into the cash value portion of your account plus accrued interest. However, your insurer may subtract funds for any loans or unpaid premiums on the policy. And, you may be charged additional "surrender fees," which could further reduce your policy's surrender value, according to Investopedia. Finally, you could also be charged income tax on the money you receive from surrendering the policy.

Using cash value to pay premiums

If you're short on cash, you may be able to use the cash value in your policy to help pay your life insurance policy's premium. Check with your agent to see how this feature would work for your specific policy. Remember, though, if you deplete the funds in the cash value account entirely, it can cause your policy to lapse, which would end your life insurance coverage altogether.

Having emergency savings on a life insurance policy can be a source of comfort. But, since personal situations are unique, and the details of accessing cash value funds are complex, it's a good idea to talk with your insurer or an insurance agent to help you decide what option might be best for you.