Should You Take Insurance in Blackjack?
The short answer
No. For basic strategy players, insurance is a losing bet. It has a house edge of about 7.4% in a 6-deck game, far higher than the blackjack hand itself.
How insurance works
When the dealer's up card is an ace, you are offered insurance. It is a separate side bet of up to half your original bet. If the dealer has a ten in the hole (blackjack), insurance pays 2 to 1. If not, you lose the side bet, and the hand plays on as normal.
Say you bet $10 and take $5 of insurance. If the dealer has blackjack, you lose your $10 but win $10 on insurance, so you break even on the hand. If the dealer does not, you lose the $5 and play on.
The math
Insurance pays 2 to 1, so it is a fair bet only if the dealer has blackjack one time in three. Break-even is 1/3, or 33.3%.
The dealer has blackjack when the hole card is a ten-value card (10, J, Q, K). In a 6-deck shoe, with the dealer's ace and your two non-ten cards out, 96 of the 311 unseen cards are tens: about 30.9%. That is below one third. So the bet loses more than it wins.
Put it in numbers. Bet $1 on insurance. About 30.9% of the time you win $2. The other 69.1% of the time you lose $1. On average you lose about 7.4 cents per dollar, a 7.4% house edge in a 6-deck game.
A good hand does not make insurance a better bet. If you hold 20, two of the tens you need the dealer to have are in your hand, so insurance is slightly worse, not better.
Even money
If you have blackjack and the dealer shows an ace, you may be offered "even money." That means you take a 1 to 1 payout right now instead of risking a push. It is exactly the same as taking insurance on a blackjack. It guarantees you win your bet, and gives up the 3:2 payout you would get if the dealer misses blackjack.
Because it is the same bet, it is also a bad one. Over many hands you lose out by taking even money. Decline it. The only exception is a counter with a high true count, as covered below.
When insurance does pay
Insurance becomes a good bet when more than one third of the remaining cards are tens. A card counter can detect that using the Hi-Lo system. At roughly a true count of +3 or higher, the odds shift enough to take insurance. See true count conversion and card counting. This only works if you are actually counting, and not at a continuous shuffler.
The feeling that "the dealer must have it" is not a count. Cards are independent of your intuition.
Why people take it anyway
Insurance feels safe. It feels like protection, and it is sold that way. Look at it as a separate bet and it is easy to see why it costs money. A dealer ace is no more likely to hide a ten than any other card.
If you want to check your instinct, play a few hands in the trainer. The Coach will mark insurance as a mistake. Also read the most misplayed hands and how to play blackjack for the full context.
Common questions
Is insurance ever worth taking without counting?
No. Without information about the remaining cards, it loses on average.
What if I have 20?
The advice is the same. Your blackjack takes a ten out of the shoe, which makes the insurance bet slightly worse.
Is even money the same thing as insurance?
Yes, for a hand that is already a blackjack. The math is identical.
Why does single deck insurance cost less?
With one deck, every card you see moves the odds a lot. Holding two non-ten cards, 16 of the 49 unseen cards are tens and the house edge on insurance drops to about 2%. Holding a ten, it rises above 8%. It is a losing bet either way unless you are counting cards.