John's piece highlighted the incideous effect of a modest inflation rate applied to retirement withdrawals. So your client borrows all this money from the policy, plans on making no further loans, and is now 80 years old. The amount at risk has likely increased, the client is a year older, and the monthly deductions have now gone up substantially. I does not take much for this thing to blow up. If your client does not die of natural causes, the 1099 may induce a coronary and you will be left explaning to the heirs how life insurance caused their inheritance to disappear.
Most heirs expect life insurance to have a different effect.
You can certainly change the assumptions to give a higher confidence level that a lapse will not occur, but doing this also warrants a comparison to more traditional taxable income gererating concepts. When I couple this with all the downsides John listed in his post, I am hard pressed to recommend it. In order to subject my client to so many risk factors, cost and restrictions, the expected result would have to be substantially better than traditional methods. To date I have not seen such a premium at an acceptable level. I am open to the possibility that I may someday, but as yet I have shunned the VUL for tax-free retirement income technique.