Why would a policy holder be more likely to withdraw cash from their policy when interest rates are high? Is the idea that there is a higher credit card interest rate, so people need more cash or something?
They withdraw to reinvest at the higher rate
That’s pretty much it.
The return on a whole-life policy from the life insurance company is . . . paltry.
reinvest those proceeds in other financial intermediaries or investments offering a higher return (yield).