Inflation Protection

Definition - What does Inflation Protection mean?

Inflation protection is a special benefit feature added to an insurance policy that provides for an increase in the value of the benefits by a pre-determined percentage at time-specific periods in the future. The purpose of the feature is to make sure that the value of the benefits is not eroded by the effects of inflation at some future time.

Insuranceopedia explains Inflation Protection

This feature may commonly be seen in life insurance policies or in policies involving long-term care. For such long-term care contracts, the feature limits the negative impact of inflation on the long-term care medical benefits available in the policy. Inflation protection is an added benefit to the main policy, and its addition may require the payment of an additional premium. An example of a long-term care policy with inflation protection is a policy with an automatic percentage increase of benefits every year.

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