The drawback is that you have to keep you money on deposit until the loan is repaid. So, in point of fact, you have to make no interest payments. These loans can be structured so that the borrower pays interest only, or principal and interest. In the interest only case, there is no time limit on the loan. If the loan is for a specific period of time, say a year, then each payment will usually include a portion of the principal as well as the interest.
Banks are in the business of renting money.
They want to make sure that you actually pay back what you borrowed, along with the interest. Life insurance policies are the second least expensive source of debt. However, if you die, the insurance company will deduct the amount you have borrowed and not pay the full face value of the policy. The longer you have had that policy, the higher the cash value since you have paid your premiums and they have generated interest income. Insurance companies invest the premiums in a number of areas including real estate projects, stocks, bonds, venture capital funds, etc.