A provision in callable bonds that prevents the bond from being called for a certain period of time. Interest payments are guaranteed during the call protection period but not afterward. The bond may be prematurely redeemed at any point after the call date. Call protection exists to protect bondholders from the risk that interest rates will fall before the call date. The period of time during which the bond cannot be called is often called the cushion.
The prohibition against an issuer's calling a bond from an investor during the early years of the security's life. Municipals and industrial bonds usually have ten years of call protection, while protection on utility debt is often limited to five years. A longer period of call protection is advantageous to the investor because calls nearly always occur during periods of reduced interest rates. Also called cushion. See also noncallable, nonrefundable.