The reason why passing on insurance in blackjack is recommended is because the dealer will only show up with a blackjack 30.87% of the time. However, to breakeven on the insurance bet you need a 10-point card to show up 1 out of 3 times (33%). The payout rate for the insurance is 2 to 1, which means that the players will end up with an even pay if their hunch was correct and the dealer does have a natural blackjack. For example, if you place $1 and decide to go for the insurance, an extra $0.50 will need to be added.

Blackjack insurance is a term that confuses a lot of people, especially novice players. What is even more confusing is knowing when to buy blackjack insurance. Experts usually say purchasing it is a bad bet and should be avoided at all costs, but that is not always the case. But before we get into that, lets us talk about what blackjack insurance is.

What is Blackjack Insurance?

If the dealer shows an Ace during a round of blackjack, he or she will offer the player a chance to purchase insurance. If you buy the insurance and the dealer’s next card is a 10, the dealer will have a blackjack, and you would have won the insurance bet. This bet pays 2:1, but the downside is that you lose your original bet.

An insurance bet is a side bet, meaning you can take it or leave it. The buy-in for blackjack insurance is usually half the amount of your original bet. For example, if you wager £50 before the dealer shows an Ace, your insurance bet will be £25.

1. The insurance but pays two to one on the winning blackjack. One-half times two equals one.
2. Blackjack insurance is a term that confuses a lot of people, especially novice players. What is even more confusing is knowing when to buy blackjack insurance. Experts usually say purchasing it is a bad bet and should be avoided at all costs, but that is not always the case.
3. The 2 to 1 payout means that the chance of a dealer blackjack needs to be at least 33.3%, and in this example, the chance is 40%. While this example is an extreme one to show when insurance is a good bet, you can also learn something from it.

Why You Should Take Insurance in Blackjack

Some would argue that taking blackjack insurance is beneficial because you will recover at least half of your original bet should the dealer get the ace-10 combination. For instance, if you make a £50 wager and purchase insurance for £25, the dealer’s next card has to be a 10 for you to win back half, which is £25.

Why You Should Not Take Insurance on Blackjack

Most experts advise players to stay away from buying insurance because the chances of the dealer getting an Ace is 9:4. These odds indicate that the math is not on the side of the player. There are 52 cards in a single deck, and only four cards out of every 13 cards have a value of 10. On average, this means the dealer will get the ace-10 combination four times when he or she plays 13 instances – the dealer will lose 9 out of those 13 times. For experts, this makes an insurance side bet not worth it.

When Should You Purchase Blackjack Insurance?

There is only one scenario in which a side bet should be taken: when you also have a blackjack. By insuring your own blackjack, you guarantee a positive return should the dealer also get a blackjack. In this scenario, you will tie with the dealer (also known as a push), meaning your original wager remains in the betting circle, but since you won the insurance bet, you will collect the 2:1 payout. Experts will still say this is a bad bet because this strategy ignores all the math and relies more on your gut feeling (unless you are a card counter, you are relying on chance that the dealer will get a blackjack after showing an Ace).

So, there you have it: only buy blackjack insurance when you have blackjack, and the dealer is showing an Ace. This will guarantee a positive return should the dealer get a blackjack. Even though experts might advise against it, the logic behind it is still sound if you are expecting an ace-10 combination.

Michael Shackleford: Hi guys, this is Mike and the purpose of today's Wizard of Odds Academy lesson will be to explain why you should never take insurance in Blackjack. What insurance is, is a side bet that the dealer has a 10 point card in the hole.

It is offered when the dealer already has an ace up, so it wins in the event that the dealer gets a blackjack. The insurance bet can be made for up to half of the player's original bet and it pays two to one if it wins.

I'm going to…

…put a two for the pace if the dealer has a 10 point card in the hole and a negative one if the dealer has an ace and a nine which represents that the player lost his insurance bet.

Let's assume six packs of cards, shall we?

Assuming no other information other than the ace up the dealer already has, there are 96 winning cards for the insurance bet, 16 times 6 out of 311 left. There's 311 because a full six-deck shoe is 312 cards and we take one out because of the dealer's ace, and there are 215 cards that will cause the insurance bet to lose.

Let's take the product of the win and the probability.

2 times 96 over 311 is 61.74% and 215 divided by 311 times -1 is -69.13%. In other words, the player can expect to win 61.74% of his bet and lose 69.13% of his bet. We take the sum which is -7.40%. That means that for every dollar the player bets on insurance, he can expect to lose 7.4 cents or 7.4% of whatever his insurance bet is.

7.4% is a pretty high house advantage and consequently, I recommend that you say no to insurance every time. Before someone says in the comments, 'Mike, what if the count is good? What if I'm counting cards?'

Yes. Then, of course, there are exceptions. If you've been counting cards and you know that the remaining cards are very 10 rich, but for the recreational player that's not counting, insurance is a terrible bet and, again, I recommend you decline it every time.

'What about even money?'

You might be asking me. Well, let me explain to you first of all, that the even money offer is the same thing as taking insurance. It's only offered when the player already has a blackjack and the dealer has an ace up.

Let's look…

…at what would happen both ways if the player has a blackjack and takes insurance. If the dealer ends up getting that blackjack, the main bet will push, so it wins nothing, but the insurance but will win one unit because the player bets half a unit on insurance. The insurance but pays two to one on the winning blackjack. One-half times two equals one.

Next…

If the dealer does not get that blackjack, the player's main wager will pay one and a half but he will lose half a unit on the insurance. The combined when between the main wager and the insurance wager is one unit when the dealer does get a blackjack and one unit when the dealer does not get a blackjack.

It doesn't make any difference whether or not the dealer gets a blackjack. If the player has a blackjack and takes insurance, he wins one unit either way and what the dealer is essentially saying is, 'Look, if you take insurance, you're going to win one to one regardless if I have a blackjack. I may as well just pay you now before I even check what I have.”

It sounds attractive but let's do some math and see if you should take it. Let's evaluate the situation where the player has a blackjack, the dealer has an ace up and the player declines insurance. If the dealer has a 10 in the hole, then the player will win nothing because it will be a blackjack against blackjack tie, in other words, a push. If the dealer has anything else in the hole, the player will win his full three to two on his wager or 1.5.

Let's assume:

knowledge of no other cards in the shoe other than what's already on the table. There are 309 cards left out of the 312 card shoe, less than three cards already involved, the player's ace and 10 and the dealers ace.

The probability that the dealer has a 10 in the hole is 95 divided by 309. Like I just said, there's 309 cards left, the shoe started with 96 tens but the player has one of them. The chances that the dealer has an ace to 9 in the hole is 214 divided by 309.

Let's examine what the player can get back either way:

If the dealer does have that 10 in the hole, the player can expect to get back nothing because the probability of zero times anything is zero. If the dealer does not have a 10 in the hole, the player can expect to get back 1.5 with a probability of 214 divided by 309. The product of those two numbers is 103.88%. If we add them up, it's obvious you still get that same 103.88%.

What this means is…

…if the player has a blackjack, the dealer has an ace up, the player can expect to win 1.0388 times his bet or about 104% of whatever he bet. The decision to whether or not to take even money is the decision; do you want to get back an average of 103.88% of your bet or just 100%?What's more? 100% or 103.88%? Well, 103.88% is more, therefore, if you're seeking the greater expected value, which you should be in any casino game, you should decline even money and go for that 103.88%.

Few caveats here:

Number one - again this is assuming the player is not counting cards, just a recreational player. Number two - this is assuming that a blackjack pays three to two.

Finally, this question has come up on my forum every once in a while and a lot of people use the argument that yes, I make a good mathematical argument for declining an insurance even money but what about the psychological argument?

If you’re in this situation with a blackjack against the dealer ace, some people will say you have a 100% chance of being happy by taking the even money, locking in a sure win but only a 69.26% chance of being happy by declining the even money.

Those figures are right but…

Insurance Blackjack Payouts

…in the casino as well as real life, you should be long-term minded. You should be thinking what is the expected average gain for any decision that you make? Do not always play conservatively and lock in the small win when the average win by taking a chance is greater.

Of course, there are exceptions for life-changing situations but if you’re playing Blackjack, it assumes that you like gambling, to begin with. You’re in the casino you’re gambling, gamble on winning that full one and half, don’t settle on the measly one unit. Furthermore, even if you do use this argument of I want a 100% chance of being happy right now, I’ll take the even money. That happiness is only going to last less than a minute until the next hand.

I think…

…you should be thinking what is going to be your happiness when you finally walk away from the table and you go home for your trip? The more money you win or the less money you lose from that sitting and the whole trip, the happier you’re going to be.

Insurance Blackjack Payout Options

Furthermore, you’re going to get more, shall we say, action by taking that chance on winning with your blackjack. Like I said you’re gambling, to begin with, so gamble!

I can’t think of anything else to say on this topic. I hope that I’ve convinced you to always say no to insurance and even money.

Insurance Blackjack Payout Money

Thanks, guys for listening and I’ll see you in the next video.

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