Is a Phone/Tablet Protection Plan Worth The Cost?
Have you ever agreed with someone, only to realize later that the suggestion was completely ridiculous?
Yeah, that happened to me at an AT&T retailer last week.
My wife has been wanting an iPad for quite some time. I suggested time and time again that our laptop and smart phones fulfilled any and every mobile web access need, but knew I was likely going to eventually lose the battle. Last week I finally hoisted the white flag of surrender, walked into the AT&T store and picked out a 32GB metallic grey iPad Air. We chose to make 20 payments since they offer to allow installment payments to be made with zero interest, and we’re saving money on our mobile phone plan by sharing the cost of the plan with our inlaws.
Image courtesy of Nutdanai Apikhomboonwaroot / FreeDigitalPhotos.net
Then came the obligatory pitch for the protection plan. The cost of the protection plan is $10 a month, and should the iPad ever be lost, stolen, or broken it would cost $199 to replace it with a similar model.
I’ve never purchased the protection plan on a phone, or a computer. But I was seriously considering getting it on the iPad because the whole point of an iPad is to take it along with us as we’re on the go, opening up all kinds of opportunity for something to happen to it. Given that we are making installment payments, it would be really unfortunate to have something catastrophic happen to a $700 tablet before it’s even paid for.
After I communicated this to my wife, the salesperson pointed out that we could even keep the protection after the iPad was paid for. We could keep the iPad for 10 years, keep the protection plan and be covered the entire time! I nodded my head initially, thinking that may not be a bad idea. Then the ridiculousness of the plan hit me:
- After 72 months, we would have paid more for the protection plan than the actual iPad.
- At some point, the iPad will be worth less than the replacement cost.
The device will likely not last 72 months, and even if it does it would be so obsolete that it would likely be unusable anyway. If something happened to the tablet very early in it’s life span the protection plan would be worth it. But at what point would the tablet not be worth as much as the replacement cost offered by the program?
For my answer, I used our 20 month installment plan as a guide. After the 20 month installment plan was complete, the iPad’s value will have diminished significantly. It’ll be at least one generation behind, and almost two years old. At that point, I’d rather put my money towards a new tablet, or whatever technology replaces it.
In the beginning of the tablet’s life the protection feels like insurance. But as time goes on, it feels more like throwing money away each month.
How do you feel about protection plans for phones and tablets? Have you ever purchased one, and how did it work out for you?
Brock is a software engineer by day and personal finance blogger at night. He is a fitness junkie and enjoys grilling and smoking meat. Married with two children, Brock strives to improve his skills as a husband and father, and is always on the lookout to stretch his family’s budget as far as he can.
I totally agree. I recently purchased a new phone, because…..CAUTION long story alert……..
We have had a phone company for a very, very long time. Not going to mention the name, but it rhymes with horizon. We have a family plan (my husband, myself, and my daughter in another state.) We pay close to a million dollars a month (might be a little exaggeration.) When my contract ended, I went online to choose my “free” phone. Found one I liked, and went to check out, where I discovered that there was a $30 fee. Because I’m nothing if not confrontational about injustice, I decided to “chat” with a “customer service” rep. This rep told me that ultimately this fee is a “so you want to be our customer” fee. So if I desired to be a customer of this almighty phone company, I had to pay to re-up my contract. I declined. I have now been without a contract for over a year, but yet I remain a customer-with my trusty $25 ebay purchased replacement Blackberry (don’t laugh – I love my Blackberry!) I am going with Straight Talk. My daughter’s contract is also up now, and she is going to make a similar move. Anyhow……..
I did purchase the one-time $6 protection for my new $60 Blackberry that will work with the Straight Talk plan. I previously paid the $5/monthly insurance fee with the company that rhymes with horizon, yet when I dropped my phone and the screen cracked, was unable to cash in on it because of all the red-tape required to do so. Presumably because my husband had to have 2 defective i-phones replaced, but I’m really not sure. Anyway, insurance is supposed to “insure,” right? Lesson learned. If I’m going to pay a monthly “protection” fee, it’s going to be myself I’m paying. Win-win. I did also purchase a one-time $12 protection plan when I bought my son’s ipod, because he’s a boy.
I’ve had my iPad for several years and wouldn’t have really considered insurance on this, but for an iPhone or smart phone it may make sense. I’ve had several phones lost/stolen, so the cost has made it up for me. In fact I ended up with a replacement android around the same time tmobile finally offered an iPhone. I ended up paying $100 for the replacement phone and sold it on ebay for $225, so it actually paid off in the end. Definitely good to pay attention to the fine print and know yourself.
I (grudgingly) pay the protection plan for my iPhone and it came in handy when I lost my phone while traveling over Christmas. I paid the $200 deductable + $30 in insurance premiums from October through December and got a brand new iPhone (same model). If I hadn’t had the insurance I would have had to pay ~$900 for the replacement (new) off contract.
So up to a point it makes sense, like insuring your house, car, or anything valuable.
Like you say, at some point it’s no longer worth insuring. For iDevices that’s usually about 1.5 to 2 years after release when (used) replacements are cheaper or about the same price as the deductable.
If you’re not worried about loss (and iPads are harder to lose than iPhones) AppleCare+ ends up being a better deal.
Marie @ Grad Money Matters says
Having a protection plan for your Smartphones and tablets are a good decision, but honestly, I don’t have any idea where could I ask about this one. My daughter has her own tablet, but it’s not very expensive and she really takes good care of her things.
Suburban Finance says
I never pay for this stuff! It sounds good, but then you don’t actually need it, especially for iPad, if you take good care of it. Considering this particular type would not last that long anyway, I don’t think it’s worth the money.
@Cathie – you make me laugh, my friend….”a million dollars a month” LOL. I’ve run into that $30 “i want to be a customer” fee too – my provider calls it an activation fee. My question was “isn’t my line already activated?” It’s just pure profit…lucky for me my employer has a relationship with my provider that waves all activation fees. They should just be honest and call it a “we want more money” fee! Thanks for sharing your great story!
@Miel – making money on you replacement phone…NICE!!!! thanks for sharing!
@Dustin – The protection plan worked perfectly for you (even though I’m sure it was a pain in the butt)! The thing I find craziest is that a device that expensive only has an expected lifespan of 1.5 to 2 years!
@marie – My son is the same way….he’s very responsible, thus we didn’t get the protection plan on his phone. My reasoning on getting it on the tablet and not on the phone is two fold: 1.) phones fit in pockets – tablets don’t and could be left laying around somewhere. 2.) We didn’t pay full price for the phone, but we did for the tablet. Thanks for dropping by!
@SuburbanFinance – I keep waffling back and forth on this…..I may end up cancelling it at some point. I don’t think I’ve ever cashed in on one of those extended warranties or protection plans either…
While I would agree that the fact that you purchased the protection plan was a mistake, I would argue that it was only a mistake because of where you bought it.
I’m a big fan of (although not affiliated with) SquareTrade warranties. I normally do not condone purchasing extended warranties in the first place, but for several items I have.
For example,.. The ST warranty for the iPad you mentioned is normally $99 for a two year plan (but the three year option is the ‘best value’). With a 30% off coupon easily found with a google search, it comes down to $59.40. Nothing more to pay, and no deductible. Moreover, if ANYTHING happens to the device, they will repay you the purchase price of the device if they cannot fix it. I’m not saying that it’s a stellar deal, but certainly better than the scam you got suckered into (no offense).
The only other thing I would mention is that a two year old iPad does not depreciate nearly as much as you think it does. They hold their values better than a Honda or Toyota.
@Rob – I’ve never heard of SquareTrade…I’m on my way over there to check it out now – thanks for the tip!