One should be able to understand the importance of the expected value of an investment in order to make rational and well-calculated choices. Such an approach might mitigate potential losses and result in the most appealing outcome regardless of other factors. However, a certain option should not be considered on its own because other elements need to be factored-in. Therefore, insurance with a negative expected value can still be a valid choice.
Life insurance can have an expected value, which positive for the company and negative for the buyer. It does not mean that such a consumer should not purchase the product on the sole basis of expected values. The main reason is the presence of concepts, such as utility and risk-aversion, where someone might be willing to accept a lower expected value for the reduction of the variance of outcomes. A person buying such insurance might not be acquiring the most attractive investment option, but its appeal is manifested in the utility, which brings a sense of security and comfort. Therefore, I would still buy the term life insurance because it provides utility. Similarly, purchasing a car in a city with outstanding public transportation might be worthwhile due to its utility.
In conclusion, one should be aware that the expected value is a solid metric for selecting the choice with the highest yield. However, it should not be considered as a sole determinant of making such a selection because other equally important elements need to be taken into the account. In the case of life insurance, it might have a negative expected value for the buyer, but it does not mean that purchasing it is not worth it. The primary reason is the fact that the majority of people are risk-averse, which leads to the higher utility of the given product.