My life insurance is already paid up. Should I take the money out or leave it there?

I don't understand.  Are you trying to take the dividens out? What type of insurance do you have and what are the disclosures in your states about taxes you would have to pay on it? Do you NEED the money (i.e., foreclosure) or are you just inquiring?

Talk to your insurance agent and also contact the New York State Insurance Department about any brochures or articles they may have on such an issue.  Also check out the following:

http://www.ins.state.ny.us/clife.htm

http://law.freeadvice.com/insurance_law/insurance_law/

This isn't really a legal question as much as it is a financial planning question.

There is a tax law consideration, though, which you also might want to bring up with a CPA if it matters.  If you want to change the beneficiary on the policy, it might mean the proceeds at your death would no longer be tax-free, in which case it might make more sense to take the loan out against the policy now.  Tax law isn't my specialty at all, so talk to someone who is familiar with these questions before you decide.