Access with no approval is the feature. It's also the failure mode, because the friction that stops a bad borrowing decision at a bank doesn't exist here. Nobody underwrites the purpose. Nobody asks whether you can afford it.
Consumption with no payback plan is the first one. A vacation, a wedding, a boat, funded by a loan you have no schedule to repay, is a permanent reduction in cash value and death benefit dressed up as a clever move. Dynamic Banking isn't borrowing. It's borrowing and paying yourself back, and the second half is the part that's optional and the part that matters.
Investing in something you can't afford to lose is the second. A policy loan funding a speculative position means the loan balance compounds at a fixed rate regardless of what the position does. Lose the money and you still owe the policy. That's leverage, and leverage against the policy your family is counting on is a different risk from leverage against a brokerage account.
Borrowing in the first few years is usually the third. Early cash value is thin because acquisition costs come out first, so a loan in year two takes a large percentage of a small number, and it slows the compounding right where compounding needs the most help. Unless it's an emergency, money you borrow in year three costs you more by year twenty than the interest rate suggests.
Fourth, borrowing when there's a cheaper dollar sitting right there. A 0% promotional card for a six-month purchase you'll clear anyway costs nothing. Cash in a savings account earning 4% costs 4% to spend. If the policy charges 5%, the savings account is the cheaper dollar. Reaching for the policy first out of enthusiasm for the concept is how people end up paying to feel clever.
Fifth, a policy already carrying a large loan. Stacking a new loan on a balance that's already 60% or 70% of cash value moves you toward the lapse scenario, and the lapse scenario carries a tax bill on money you never received. That's the one that turns a manageable problem into an expensive one.
And any month you can't name the repayment schedule out loud. Amount, source, and date. If you can't say those three things, the answer this month is no, and it may well be yes next month once the plan exists.