A wash loan means the rate the carrier charges on your loan equals the rate it credits on the portion of cash value securing that loan. Charge 5%, credit 5%, and the borrowing costs you nothing net. That's where the phrase zero net cost comes from.
It's a real feature and it's in a lot of contracts. It's also surrounded by conditions that get left out of the pitch.
Most contracts that offer it don't offer it from day one. It commonly begins in policy year 11, sometimes year 10, sometimes later, and before that the loan rate runs above the credited rate. So a strategy built on borrowing in year 4 is not a wash-loan strategy, whatever the presentation said.
It's also usually a feature of a specific loan type. Contracts often let you choose between a fixed loan and a variable or participating loan, and the wash provision typically attaches to one of them. Some carriers guarantee the wash in the contract language, and others describe it as their current practice, which means it can change. Read which one you have, in the contract rather than the brochure, because the difference between guaranteed and current is the entire difference in a bad decade.
And under non-direct recognition, a wash on the loaned portion doesn't mean the loan is free of consequence. The loan balance still reduces the death benefit until it's repaid, and it compounds if you leave the interest unpaid. Zero net cost describes the interest math, not the effect on the contract.
The honest way to use the feature is to design around it. If your policy washes at year 11 and your funding plan needs to borrow at year 6, either the plan moves or the borrowing gets priced at the real early-year rate and the numbers get run that way. I'd rather build the plan on the guaranteed language and treat the wash as an improvement when it shows up rather than as a load-bearing assumption. Ask your carrier one question this week: what year does my contract begin the wash, and is it guaranteed or current.