However, they will lose money and take a hit to their blackjack odds in the long run. And it is all in the math.

Part of what helps a player’s basic blackjack odds is that they receive a 3-2 payout when they are dealt a natural blackjack, while the dealer does not receive a payout when he is dealt a natural blackjack. Blackjack odds are based on a player’s opportunities to make money. The better the opportunity the more it improves your blackjack odds.

This is why receiving a 3-2 payout is so important. It is always why players should avoid blackjack games and variations that do not offer a 3-2 payout.

When you take insurance on your blackjack against a dealer’s Ace you are giving up your chance of receiving that 3-2 payout for the guaranteed even money. Players who believe in taking that even money just to make sure they are getting money feel that if they are receiving some money so they must be doing good. After all, receiving money is good right?

Actually in this case it is wrong. Taking even money, a 1-1 payout, for a natural blackjack can have a big negative impact on your blackjack odds. How big? A 1-1 payout for a blackjack hits your odds for 2.27%.

So you have a choice. You can take the even money and the 2.27% hit to your blackjack odds, or you can decline insurance and take the chance at the 3-2 payout and keep a hold of your odds.

Insurance is a side bet on whether the dealer’s hole card a 10.

Insurance is only offered when the dealer is showing an Ace. Since an Ace is a must for a natural blackjack and is less numerous in the deck than 10 valued cards. So if the dealer has an Ace showing his chances of having a natural blackjack are higher than if he had a 10 card showing. So insurance is offered to ‘insure’ your bet.

When you insure your bet you pay half of your original bet; so if you had bet $10 insurance would be $5. And if the dealer does in fact have a 10 for a hole card you would be paid 2-1.

The problem with insurance is that, with an Ace, the dealer can still have a strong hand without having blackjack. In those instances you would lose the round and your original bet. But since the hole card is not a 10 you would also lose your insurance bet too.

And that is what makes insurance a bad idea. It has been proven that over time a blackjack player will lose more money by taking insurance than if he just played blackjack without taking it.

The best way for a novice blackjack player to play is according to basic strategy so that he has a strong starting point for blackjack strategy. Card counting can always be added later. But if you look at a basic strategy chart, you will notice that nowhere on the chart does it tell you to take insurance.

This is because, while following basic strategy can lower the house edge (the whole point of having a blackjack strategy), insurance will raise the house edge. Since taking insurance raises the house edge it is not advised on a basic strategy chart. And since basic strategy offers the best statistical plays, it follows that insurance is not a good statistical play.

Because it raises the house edge and will cost blackjack players more over time it is best to avoid insurance and never take it.

This is because basic strategy has taken into consideration the cards that dealers are more likely to bust on and which ones they are less likely to. This explains why you stand on stiff hands when faced with anything below a dealer’s 6. Those cards, 2 through 6, are the ones the dealer is more likely to bust on. This does not mean that they will but the chances are higher with a 6 than with a 10.

By playing blackjack according to basic strategy you can lower the house edge to about 0.05%. This happens over time. And some blackjack players feel that once they are winning more that they need to protect their strong hands against a dealer’s Ace.

Not only is the Ace the least likely card a dealer will bust on, it is necessary for having a natural blackjack. A dealer will offer you insurance.

As a basic strategy player you should decline.

Insurance is essentially a side beat that casinos have in blackjack that can help to not only increase their profit, but to also raise their edge. This is because the chance of winning versus the chance of losing creates, on average, an edge increase of 7%. And it is in the house’s favor.

Taking insurance has the potential to undo the work you have done to lower the house’s edge in blackjack to 0.05%. That impact has the potential to lower the house edge to below what the average blackjack game’s house edge is to begin with.

Most blackjack games will have an average of 2-5%. If you play basic strategy and lower the house edge to 0.05%, taking insurance will bounce the edge back to the house around 6.5%, which is likely to be worse than where you started.

When you are playing basic strategy never take insurance. If you watch you will see that serious players will not take it. And if they are not then neither should you.

If you are a card counting player then you are able to distinguish the one instance in which it is good to take insurance.

In order to be in that one instance two circumstances must be in place first:

You must be playing with a remaining deck that is rich in ten value cards. You must also have been dealt a natural blackjack.

Now, let’s examine the two profitable results that can happen once you find yourself in that instance of a high card rich deck and are holding a natural.

For this example, we will say that you are playing at a $10 table. You have been dealt a natural blackjack and the dealer’s up card is an Ace. You have been counting the deck as the game has been played. You know that the deck is rich in ten value cards. Because of the dealer’s Ace you are offered insurance. Because this is that one instance when it is favorable to take insurance, you take it.

The first result is that the dealer’s hole card is a ten value card—he has a natural blackjack too. You will collect on your insurance bet—this is because insurance is really a side bet on whether or not the dealer’s hole card is a ten value, and since it is you win the side bet with a 2-1 payout: $10. As for you both having naturals, that is a push and your original bet is returned to you. But you still made a net gain of $10 all because you took insurance. If you had not taken it, while you would not have lost any money, you would not have gained any either.

The other result is that the dealer does not have a natural, so you lose the insurance bet. But since you have a natural blackjack you won the 3-2 payout. You win $15 minus the $5 insurance bet. Your net gain is still $10.

This is how insurance can in fact be profitable for you.

But you must be dealt a natural blackjack. And you must have been card counting and know that the deck is rich in ten value cards.

If you do not have both of those then do not take insurance.

There are two parts to understanding insurance: knowing what it really is and how it really works, and when it is profitable to take insurance—there is only one instance that it is.

First what insurance is.

You are offered insurance when the dealer’s up card is an Ace. Insurance is offered because an Ace is necessary to having a natural blackjack. On the surface, the casino would like you to believe that taking insurance will protect you from losing your bet if the dealer has a natural blackjack.

What insurance really is, is a side bet that the dealer’s hole card is a ten-value card, the other card required for a natural blackjack. With insurance there are three chances of winning, one pushing and two losing chances. Again, on the surface it sounds pretty good, but it is not.

And here’s why. We are going to look at insurance from a statistics point of view, considering an infinite shoe—and since most casinos use six to eight decks and online casinos use Random Number Generators, the numbers and probability are very close. There are 9-4 odds against the whole card being a ten value card.

Translating this to money, we will say that you make 1300 $5 insurance bets. You would win your insurance bet 400 times, making $4,000. But you will also lose 900 times, losing $4,500. That means you will lose $500 for taking insurance.

In my next post I will explain the one circumstance under which it is advisable to take insurance.

Look for Making Insurance Profitable Rather Than a Loss.