Insurance Expected Value Calculator
Is the policy worth more than the premium?
📚 Learn more — how it works, FAQ & guide Click to expand
Learn more — how it works, FAQ & guide
Click to expand
Insurance Expected Value Calculator
Most insurance has negative expected value — you lose money on average. The question isn\'t "will I save money" (you won\'t) but "is the worst case bigger than I can absorb?". This tool runs both numbers.
How to use this tool
- 1
Enter premium + payout
What you pay vs what you'd get.
- 2
Estimate event probability
Per year. Insurance companies have actuarial tables; you can guess.
- 3
See expected value
Negative = pay more than you get on average.
Frequently Asked Questions
All insurance has negative EV?
Yes — by design. Insurers must collect more than they pay out (operating costs + profit). Average buyer loses money. You buy insurance for tail-risk protection, not investment.
When is insurance smart anyway?
When the loss would be catastrophic (>10% of net worth) and you can't self-insure. Mandatory: car liability, health (in many countries), home if mortgaged.
Examples of bad insurance EV?
Extended warranties (often 50% loaded), phone insurance, dental for healthy adults, identity theft, pet insurance for old pets.
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100% Privacy. This tool runs entirely in your browser. Your data is never uploaded to any server.