An annual adjustment in wages to offset a change (usually a loss) in purchasing power, as measured by the Consumer Price Index. The Consumer Price Index is used rather than the Producer Price Index because the purpose is to offset inflation as experienced by the consumer, not the producer.
In many policies this is an option. Basically it takes into account an increase in the cost of living over time. This would be very important to have if you are going to buy a until you are 65 policy or a lifetime policy, as the cost of living will most certainly rise during that time, unless maybe you are fairly close to age 65 already.