Ok now before you assume I’ve gone completely crazy, hear me out! In most cases, cell phone insurance is a total ripoff. You can protect your devices for much cheaper than your service provider would have you believe. Don’t believe me? Let’s do a little math!

My husband and I got brand new cell phones in August of 2014. We didn’t really NEED new phones, but of course the temptation got the better of us, and I was sick of my iPhone. I wanted to go back to an Android device and so we made the switch to a new service provider, and picked out our new devices. We both chose the same phone, and the service provider offered a deal where we could make monthly payments on our devices so we wouldn’t have to pay for them outright. We were then offered an insurance plan, which I insisted we needed because if something happened, surely we wouldn’t have the money to replace the device. So we signed up to pay $25 a month for 24 months for each of our two devices. That’s $600 per phone if you’re keeping track of the math. The “protection plan” is an additional $11 a month per phone.

Now…here’s where it gets interesting. If I have to have my phone replaced, I also have to pay a deductible of $200.

Let’s break that down:

As of today I’ve paid 20 monthly payments on this phone. Meaning I have paid $220 in monthly “insurance premiums”so far. When my phone breaks, I will have to pay another $200 to get it replaced. That’s $420 (if it breaks right now. More if it breaks in future months.) You might be thinking “yeah, but you just said your phone costs $600, so you’re getting a deal right?”

It seems that way, until you realize that the same phone, a brand new LG g3 costs only $200 at Best Buy or $171.50 for the LG G3 on Amazon. Because we chose to finance our phones rather than buy them outright, we were already paying a lot extra. Now they want us to pay over $300 more than the phone is worth to replace it? What kind of “protection” is that?? PLUS most of these cell phone “insurance” companies require you to forfeit your broken phone, and they give you a refurbished one (for which they are charging you MORE than it costs to buy new!)

Now one could argue that car insurance, health insurance, homeowner’s insurance, etc. all operate on this concept. And you would be correct, except the cost to benefit is a little more in line with what I would call “reasonable” in most cases with those insurance companies.

So what do you do instead? Certainly not everyone can afford to shell out $400 or $600 for a new phone if theirs breaks. Of course you could go for a cheaper phone, or opt for one that isn’t this year’s brand new model. But let’s just say you know that when your iPhone breaks you’re going to want the new one. What do you do then?

Simple. Instead of taking that $11 (or whatever the insurance premium is) and paying it to the insurance company…pay it to yourself. Put that money aside in a separate account, envelope or sinking fund. Pay yourself every month and IF your phone breaks, you will have money put aside for a new one. In my case, if I had set that $11 aside, I would already have $220 towards a new or replacement phone. Now I have $0 set aside AND I’ll have to shell out $200 to get a replacement. Oh, and what happens if my phone never breaks? What happens if I decide to upgrade? Well that money is lost. Poof. Gone. If I had been smart and putting it aside, I could roll it over to the next phone, or pay for part of my upgrade with it.

What else can you do to ensure the longevity of your device? Invest in a decent case. They don’t have to be an Otterbox case (those are good though from what I hear). I just found a simple case and it has saved my phone from countless mishaps. I drop my phone CONSTANTLY. Knock on wood, she’s still tickin’! Use screen protectors to prevent scratches. Don’t use your phone when it is plugged in. It causes added stress on the contacts in the port and can cause the contacts to bend or break. Put your phone AWAY when you use the restroom, or are near water. It’s not always convenient, but it will reduce your risk of dunking your phone inadvertently.

Do you have cell phone insurance? What were your experiences with these companies?

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