Define: Average Life

Average Life
Average Life
What is the dictionary definition of Average Life?
Dictionary Definition of Average Life

Average Life:

Noun

1. The typical or expected duration of an individual’s life, calculated by taking the sum of the ages of a group of individuals and dividing it by the number of individuals in the group.

2. The average lifespan of a particular species or population, determined by statistical analysis of the ages at which individuals typically die.

3. In finance, the average life refers to the length of time it takes for a debt instrument, such as a bond or mortgage, to be repaid or retired. It is calculated by considering the timing and amount of principal repayments or interest payments over the life of the instrument.

4. In insurance, the average life refers to the expected duration of a policyholder’s life, which is used to determine premiums and benefits for life insurance policies.

5. In colloquial usage, the term “average life” may also refer to the typical or ordinary experiences, circumstances, or achievements of an individual or group.

Full Definition Of Average Life

The term “average life” is commonly used in legal contexts to refer to the expected duration of a particular asset or liability. In finance and accounting, it is often used to calculate the depreciation of an asset or the amortisation of a liability. The average life is calculated by taking into account the expected cash flows associated with the asset or liability and determining the point at which half of the total cash flows are expected to have been received or paid. This calculation is important for determining the financial impact of an asset or liability over its expected lifespan.

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This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 13th April 2024.

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