What Does Ad Infinitum Mean?
“Ad infinitum” is a Latin phrase that means “without end or limit.” In finance, it refers to a cash flow that happens to an entity or a person in intervals without a specific time limit.
Insuranceopedia Explains Ad Infinitum
“Ad infinitum” can refer to the predicted steady cash flow of a company, based on an analysis of its standing for a certain number of years. It can also refer to a government bond in England that yields the same interest rate forever.
For a business entity, ad infinitum cash flow remains a projection rather than a fact, no matter how sound the calculation, because it disregards unforeseeable causes of disruption that might cause its dissolution, like force majeure.
While the numerical value of ad infinitum payments will remain the same over time, the payment’s financial value does not retain its strength throughout the years because the payouts do not adjust to account for the future depleting value of money.