Online Poker Sites’ All-in Cash Out: Is poker insurance worth it?
What is poker insurance?
Insurance in poker is similar to any other form of insurance – you pay a fee to protect yourself from a negative outcome.
In poker, that negative outcome is losing money.
In live poker, insurance can come in the form of an agreement made at the table, while online, poker sites have introduced insurance as “Cash Out” offerings.
PokerStars’ version of this is called “Cash Out”, while GGPoker’s* is called “EV Cash Out”, and PartyPoker’s is “All-In Cash Out”. Many online poker sites have similar schemes available.
What is “Cash Out”?
Cash Out is an offer made by poker sites to limit your potential losses during a hand. If you are all-in against another player and there are community cards still to be dealt, to reveal the winner of the hand, the poker site will allow you to cash out your equity, for a fee.
This means that if you're a 60% favourite to win the hand, you will be given that percentage of the pot, regardless of what cards come out.
Poker sites are very open about the benefits and disadvantages of Cash Out, and offer it to players as a means of reducing variance and swings in results.
However, the main downside to Cash Out is the fee.
Note: When we discuss “Cashing Out”, this should not be confused with withdrawing money from your poker site account, which (confusingly) can also be described as “cashing out”.
Should you Cash Out?
From a purely mathematical perspective, you should not accept the Cash Out offer. PokerStars and GGPoker* both charge players 1% of their equity in the hand for insurance, which means that players will always be worse off.
It can be painful to see your pocket-aces cracked by an unlikely flush or underpair, and it's natural to want to avoid that fate. But by cashing out, you lose the full pot that your hand will win most of the time (as you're only given a percentage of the pot), and whether you win or lose, you pay that insurance fee on top.
PokerStars only offer insurance in their micro stakes cash games (up to $0.05/$0.10), which gives you a hint that it might not be good value, given it isn't even offered in their bigger games.
PokerStars describes the situation very well on their website.
It reads:
“The only real drawback of using the Cash Out feature is the 1% surcharge that PokerStars takes on the value of your hand. Cashing out is effectively like taking Insurance. Your (sic) paid off regardless of the outcome of the hand. The cost is that you receive slightly less back than the actual equity of your hand.”
Are there any times when you should Cash Out?
We recommend against using the Cash Out option and disabling it in your online poker site settings menu.
The only time it may be prudent to Cash Out is if you are taking a shot at a higher level and cashing out will strongly build your bankroll. This is a rare and unlikely situation, given that most poker sites only offer Cash Out at the micro stakes. However, if you find yourself in this situation, you may find that it is warranted.
Aside from that very specific situation, we recommend against Cashing Out because of the equity you lose every time you agree to the deal.
Mindset and bankroll
If you find yourself attracted to poker insurance, and willing to pay a 1% fee (or perhaps more on other poker sites) to avoid the risk of your hand not winning, you should consider why that is.
It may be a sign that you need to work on your mental game.
Losing marginal situations where you are a small favourite is part of the game, and being able to withstand these frustrations and face them, is necessary at times.
Taking insurance can be a psychological disadvantage. If a player is constantly worried about losing a hand, it can lead to indecision and mistakes. It's important to remain focused and make the best decision based on the cards and the situation.
If you are affected by the fear of losing, it can negatively impact your performance.
Another consideration is that you may be playing higher stakes that you should. If you find that winning a hand is especially important and you're willing to pay a fee to protect that hand, the amount of money you are playing with may be too high for your risk tolerance or your bankroll.
It’s good that poker sites are looking for ways to help players manage variance and limit their loses, but our view at Poker Bankroll Expert is that the fee taken per hand is too high a price to justify the offer.