If you are like me, you own a cell phone and are one of the customers who bought insurance provided by your cell phone company because it seemed like the smart thing to do. After all, you pay health and automobile, home owner's and dental - why not cell phone? Perhaps you also thought it to be a good idea because it seems like a service protection plan on your old land line, which didn't ever get used either now that I think about it.

1. Playing the numbers?

In most cases, people do not lose their cell phones in the first few months of ownership. During that time newer and more technologically advanced phones become available. Most cell phone insurance contracts provide for a comparable phone to the one originally purchased. This means you could be carrying last year's model or an even more basic model than the one you currently own.

2. Are you trading down for a lemon?

When you get a replacement phone from the cell phone provider's insurance company, it is not a new phone by any means. These are refurbished cell phones which have been fixed after being broken by a prior owner. This accounts for the replacement not being as reliable and prone to problematic issues later on, in which case you will need to buy a new phone anyway. When you add that cost in, you could spend double what it would have cost to purchase a newer version under warranty.

3. Does the cost outweigh the means?

If you don't lose your phone nor break it, how much will you have paid over the course of your contract time? If it is 5 years and $60 a year, you could have paid for a much nicer phone that the replacement phone would be in such an instance. Most companies also require a $50 deductible to even process a claim. Add that onto the $300 for 5 years of premiums and you could have had a V-8 so to speak.

After my last phone died and I stood across the counter from the phone company associate, I realized how much it had actually cost me. He handed me an inferior modeled phone then the one I had owned previously and it was made in Korea. Lesson learned, I no longer opt to pay cellular phone insurance and haven't for 2 years now - And yes, I still have the same phone made in Korea and all.

Learn more about this author, Niki Leigh.
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