Since Apple introduced a new iPhone, the other – now less-desireable – iPhones dropped in price. And since our phones have been about two numbers behind, it was time to upgrade.
So we upgraded. Now my phone is only one number behind the current phone. I hope to be able to make it to three less than the new phone eventually.
In the process of buying the phone, however, the guy (not sure if he’s a cashier, customer service representative, salesman, or what) recommended we buy the protection plan. A warranty for the phone – in case anything happens to it, it would get replaced. These newer phones are thinner than our older phones, so I figured they might be more easily bent or broken. Plus the screen is larger, which means more area to be damaged. So a warranty/insurance policy made sense.
I asked the guy how much it cost, and he said $10 a month per phone. I agreed, and we continued with the transaction and getting our phones switched.
We got our phones, and everything was fine.
About a week later, I got a message from the phone company telling me I should activate my protection plan.
Activate? Shouldn’t insurance just be there? There shouldn’t be anything to activate…
So I went to the website and found the descriptions of the protection plans.
It turns out the $10/month plan is insurance plus tech support.
The insurance-only plan was $6 or $7 per month.
And the deductible was half the price of the phone. My thought behind the insurance was to avoid paying anything to get a replacement phone.
Can you imagine if car or house insurance worked that way? Your $20,000 car is totaled and you have to pay $10,000? Or your house burns down but the insurance will pay only half the value?
But this story turns out well – I was able to cancel the protection plans online. No having to talk to anyone!
I know, I know – we are treading on thin ice by not having replacement phone insurance. But we’ve lived this long without insurance, and we kept our old phones (they were going to give us about $30 for the phone) so if the new phones are damaged we can just swap SIM cards and keep going.
Learn from My Mistakes
1. Ask what other plans there are.
I did not, so I didn’t know that I had signed up for the middle plan, which had me paying for things I didn’t want.
2. Ask what the deductible is.
If it’s a significant fraction of the price of the phone, just use the money you would have spent on the insurance each month and instead buy municipal bonds. Or something. Pay yourself that money and invest it and you’ll come out ahead in the long run.
A decent phone case is worth the money, so buy that and consider that your insurance.
But if he should ever wish to redeem it, then he shall add one-fifth of it to your valuation.