Glossary


Inflation Protection

An optional benefit designed to help preserve the value of the daily or monthly benefit amount. This provision increases the daily or monthly benefit amount by a specified annual percentage, on either a simple or a compound basis. For example, if a policy is purchased with a $2,000 monthly benefit and 5% simple inflation protection, after 20 years, the insured would be entitled to receive a benefit of $4,000 monthly [$2,000 x (1+(5% x 20 years))]; if the same policy were purchased with 5% compound inflation protection, after 20 years the insured would be entitled to receive a benefit of $5,054 monthly.