The test of any credit source is what it does in a bad year, because that's the year you need it.

Home equity lines failed that test in 2008 and 2009. Banks cut or froze hundreds of thousands of lines of credit. Plenty of those borrowers had perfect payment histories. Falling home values had changed the collateral. The HELOC was there in June and gone in October, and nothing the homeowner did caused it.

A policy loan runs on different machinery. The collateral is the cash value inside your own contract, and the carrier's obligation to lend against it is written into the policy. There's no credit check, no reappraisal, no committee reviewing your line because unemployment rose in your county. As long as the policy is in force and the loan stays under the available cash value, the money is there.

The cash value itself also behaves differently in a downturn depending on what you own. Whole life cash value doesn't decline with the stock market, since it's tied to the carrier's general account and a declared dividend rather than to an index. An IUL has a floor on its account value, usually zero. A bad index year credits nothing instead of losing money. But the policy charges still come out that year, so the account value can still slip. Those are two different experiences and you should know which one your contract gives you before the year arrives.

A few things that can still go wrong, so you're not surprised. Rates on a variable policy loan can rise. And they tend to rise in the same stretch when everything else is tightening up. Dividends can be reduced, since they're never guaranteed. And a policy you stopped funding because money got tight is a policy with a smaller borrowing base right when you wanted a bigger one. If cash flow is the pressure, there are moves ahead of surrendering, and they're at make these moves before you surrender.

The version of this that matters most is the boring one: the policy's line of credit is only reliable if the policy stays in force. Keep the premium paid, keep the loan balance under control, and the thing does its job in the year that counts.