A household with both tools asks this every time money is needed. Four differences actually decide it.
Repayment schedule. The line of credit has one, the policy doesn't. A HELOC in its repayment period demands a payment every month whether or not the month cooperated. A policy loan has no due date, and if you skip a year the interest gets added to the balance. So when income is uncertain, that flexibility is most of the argument.
Who controls the rate. A variable HELOC moves with the prime rate, and it can move against you for years. A policy loan rate is set in the contract, either fixed or tied to a stated index, and you knew the terms when you signed. Neither is automatically cheaper. It depends on the year.
Who can shut it off. The bank can freeze or reduce your line of credit, and in 2008 and again in 2020 plenty of banks did exactly that with a letter and no conversation. The carrier can't freeze your policy loan availability as long as there's cash value behind it.
What it costs while it's outstanding. The line of credit charges interest and that's it. A policy loan charges interest and reduces the death benefit by the outstanding balance until it's repaid, so the cost includes coverage your family would have received. That's the piece people leave out of the comparison.
Order of operations for most households: line of credit for anything under a year, policy for anything over it, and neither one for something you can pay cash for out of surplus this month.
The rough sort: short payback with a firm date, use the line of credit. Long payback, uncertain income, or a bank you don't want in the middle of it, use the policy. And if a loaned-up policy is heading toward its limits, have that conversation before the next loan rather than after, because a policy that lapses with a big loan against it generates a taxable event.