While it’s primarily associated with blackjack, poker insurance is an agreement between players in the form of a traditional side bet.
The purpose of insurance in poker is to minimize the potential loss if the opponent wins the pot. In other words, it helps protect the player from a bad beat or a suck out.
Imagine a scenario when you’ve gone all-in against a player with a bigger chip stack. A bad beat in this situation could put you out of the game if you can’t afford to rebuy.
So, making a small insurance bet prevents this from occurring at the cost of lower overall winnings.