Explanation of Insurance

Players getting the stacks in for an especially large pot may wish to purchase insurance. The insurance policy is usually provided by a fellow player and not the house. In other words, it’s a side bet made between two players at the table. Depending on the exact bet, the insurer may end up covering the entire value of the pot assuming the player involved in the hand gets sucked out on.

Example of Insurance used in a sentence -> It was a rather large pot so we decided to take insurance.

How to Use Insurance as Part of Your Poker Strategy

Should we look to take insurance when playing a big pot?

Mathematically, no. The insurance costs money and decreases the overall expectation of the situation. Insurance should only be taken if a player cannot afford to lose the pot. However, if the player cannot afford to lose his stack, he should absolutely not be sitting at the table in the first place. If a player is ever in the situation where he needs to purchase insurance, he should strongly re-evaluate whether he is playing the correct limits given his bankroll.

See Also 

Expectation, Expected Value