A password can definitely give you plausible deniability. Look at VeraCrypt, for example. In a sense it's less secure because it can be seen being typed by others or by cameras and is vulnerable to hardware (and sometimes even software) keyloggers. On the other hand, a USB drive can be stolen and can also make you vulnerable to extortion. It's harder to make someone give up information in their brain then to give up a USB drive.

Or a furnace. That usually leaves no trace of the physical disk having ever existed, which may be important for <insert state actor/military here>.