The EV of all insurance policy is negative when measured in absolute dollars. But the EV can be positive if the value of dollars to you doesn’t scale linearly.
For example, if you have to spend $10,000 on medical bills, that might be 1 unit of disutility. But if you have to spend $100,000 on medical bills, that might be 30 units of disutility, not 10, because you just don’t have that kind of money and you will go bankrupt and your quality of life will go way down. With this reasoning, health insurance might have a positive EV for utility, even though it has a premium that gives you a negative EV for money.
This reasoning is less likely to apply to life insurance, because people are less likely to care about what happens after they die. But for people whose beneficiaries would suffer a lot from losing their income – perhaps they would be evicted – life insurance can be worth it.
For example, if you have to spend $10,000 on medical bills, that might be 1 unit of disutility. But if you have to spend $100,000 on medical bills, that might be 30 units of disutility, not 10, because you just don’t have that kind of money and you will go bankrupt and your quality of life will go way down. With this reasoning, health insurance might have a positive EV for utility, even though it has a premium that gives you a negative EV for money.
This reasoning is less likely to apply to life insurance, because people are less likely to care about what happens after they die. But for people whose beneficiaries would suffer a lot from losing their income – perhaps they would be evicted – life insurance can be worth it.