Where do I begin.

That's not arbitrage, that's leverage.

"Smart men go broke three ways - liquor, ladies and leverage." - Charlie Munger

The problem comes when your assets go down in principal. Now instead of losing money 1x, you're losing money multiple times. This caused the ruin of many a wide-eyed investor in 2006-2008.

Not to mention, managing recursive layers of debt & investing requires lots of TIME.

Not to mention, according to Consumer Reports in March 2022, the average annual rate of return on a whole life policy is 1.5%.

How is this a smart strategy?