If you've ever purchased a cell phone you were probably asked about whether or not you wanted to place a mobile phone insurance policy on it. For the big providers, the company they contract through to offer protection is Asurion. For five dollars per month, you are protected against loss, theft, or damage. This may sound like a good thing. For a few bucks a month you are able to protect yourself in these events. It may seem like an ideal form of insurance. But generally, this isn't a great way to protect your investment. It comes down to the numbers.
At five dollars per month, you are going to be spending $120 over the two year contract agreement that most cell phone customers lock into. So imagine that you lose your phone in the 10th month that you own it. You've already spent $50 for mobile phone insurance. Now you'll have to pay an additional $50 to $100 in the form of a deductible. That's a total of $100 to $150 that you'll be paying to get your hands on a replacement phone from the insurance provider. Usually, the phone you receive as a replacement is a refurbished unit that might not even be worth $100.
Once you see these numbers and think about it logically, you realize that there are few situations where it makes sense to pay for mobile phone insurance. You may be asking yourself: what are the other options that can protect my investment? The best way to cover against the possibility of cell phone loss is self insurance. This means setting aside that five dollars per month that you would have been paying to an insurance company. If you manage to get through just one two year contract without damaging or losing your phone, you will have created a $120 fund that can be used in the future. Compare this to losing that $120 to an insurance company if you had maintained coverage.
Most people don't lose or break their phones often enough for mobile phone insurance to be a good investment. Of course, if you are the type of person that's known to put their cell phone in danger, then it might be more of a consideration for you. This includes people that work in hazardous environments such as construction. The other circumstance where it can make sense is if you have a particularly expensive phone. If you have a phone that would cost several hundred dollars to replace, it generally makes sense to carry coverage for the first six months to a year.
At five dollars per month, you are going to be spending $120 over the two year contract agreement that most cell phone customers lock into. So imagine that you lose your phone in the 10th month that you own it. You've already spent $50 for mobile phone insurance. Now you'll have to pay an additional $50 to $100 in the form of a deductible. That's a total of $100 to $150 that you'll be paying to get your hands on a replacement phone from the insurance provider. Usually, the phone you receive as a replacement is a refurbished unit that might not even be worth $100.
Once you see these numbers and think about it logically, you realize that there are few situations where it makes sense to pay for mobile phone insurance. You may be asking yourself: what are the other options that can protect my investment? The best way to cover against the possibility of cell phone loss is self insurance. This means setting aside that five dollars per month that you would have been paying to an insurance company. If you manage to get through just one two year contract without damaging or losing your phone, you will have created a $120 fund that can be used in the future. Compare this to losing that $120 to an insurance company if you had maintained coverage.
Most people don't lose or break their phones often enough for mobile phone insurance to be a good investment. Of course, if you are the type of person that's known to put their cell phone in danger, then it might be more of a consideration for you. This includes people that work in hazardous environments such as construction. The other circumstance where it can make sense is if you have a particularly expensive phone. If you have a phone that would cost several hundred dollars to replace, it generally makes sense to carry coverage for the first six months to a year.
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