Is cell phone insurance a worthwile purchase? As a former sales consultant with Verizon, and a current customer of Verizon Wireless, I have mixed emotions in regards to cell phone insurance. Playing the devil's advocate, let's consider the following:
You walk into a store, sign up for a cell plan (2yr standard contract) and decide to go with a free phone out of the door. Normally that phone costs $19.99 with a two year contract, because there is a promotion going on (and you are convinced that it is a great deal) or because the phone is a garbage phone that has had nothing but problems and the store is having a hard time getting rid of the phone (even for free). The sales person starts talking insurance: $4.99 a month and it will cover manufacturing defects, loss, theft, etc., and a new phone will be shipped out to you within 24 hours should anything happen to it.
Replacing a cell phone, especially a higher end phone (such as the i-Phone or the Blackberry Storm) can be a pricey endeavor, so you are sold on the idea of insurance. Like other forms of insurance, there is a $50 deductible (which some sales people fail to mention), and there are not only limits to how you can use it, but if you get a garbage phone and it craps out on you...guess what, you are most likely going to get the same crap phone which has probably been someone else's junk before it got "refurbished" (which again, some sales people fail to mention).
The salesperson makes his/her case for insurance (after all, it adds to his/her data sales points...which isn't much at all, but in the world of commission and competition, every little bit helps); reminding you that after the warranty and time frame for returning/exchanging the phone has expired...you are stuck with that phone until you become eligible for an upgrade. And what will you do if that phone decides to stop working? You will have to purchase the phone at...*gasp* full retail price (which could be $50 or more than what you paid for it the first time around). Shriek!
But here's the thing. Say the phone lasts you 1 1/2 yrs., and then decides to crap out. By this time you have spent $89.82 on insurance and will be shelling out an extra $50 deductible to get the very same phone that may or may not be refurbished and functional. But consider this: for the same amount of money to get a refurbished phone using your insurance, you can get a better phone full retail for the same price; or go to Craigslist or Ebay and get a phone for a lot cheaper than what it would be to use your insurance or buy full retail.
Cell insurance may be a good idea but in my opinion it is not a real good investment considering that the amount you pay in monthly and in deductible, you can often get a better phone for the same price...or less. And in today's economy, it may be more prudent to not purchase it.