I want to create an option for my customer that they can select for insurance that will cost 65 cents for every 100$ they spend for the entire order.
Keep in mind I only want to give the option to insure everything not individual items.
Sounds like something that could better be implemented as a custom total than as a separate product.
I won't go into detail with how to do that, you will find tutorials such as http://excellencemagentoblog.com/blog/2012/01/27/magento-add-fee-discount-order-total/
collect method can add the insurance fee based on the subtotal.
So far it is pretty standard. But you want the customer to choose if they want insurance or not. I would implement this similar to discount codes:
Note that on every page load on the cart, the totals are recalculated without further ado.