Expected Value

What Does Expected Value Mean?

Expected value is the projected future value an investment or an asset will have after a certain amount of time.

Insuranceopedia Explains Expected Value

Expected value can help both insurance companies and policyholders select investments. If the expected value of an investment is too low, compared to the risk of making this investment, it may be viewed as a bad decision. However, if the risk is low enough, and the expected value high enough, then the particular investment may be viewed more favorably.

Life insurance policies often have an investment component to them. Those considering the policy will, therefore, factor in the expected value of the investments and not simply the amount of coverage the policy offers.