The Hidden Deductible: Is Cell Phone Insurance Worth It?
Do you have insurance or an equipment protection plan for your cell phone? If so, you’re in good company. Given how often phones get dropped, wet, cracked, sat on, or lost, it almost feels necessary to have some coverage. With the high prices of smartphones like iPhones, not having protection seems risky.
When my wife first got her iPhone, the coverage plan was just $7 per month—an affordable deal we couldn’t pass up. However, things have changed. With our kids getting older and more phones being added to our family plan, I recently updated our plan to include three phones. I was shocked to discover that Sprint’s Total Equipment Protection (TEP) plan now costs $13 per phone. That’s an extra $39 per month for insurance on three phones.
This made me question if cell phone insurance like Sprint’s TEP is truly necessary. Does the cost justify the benefits? Let’s break it down.
If I paid $13 per month for each phone, that’s $156 per year per phone, totaling $468 annually for three phones. While $156 per phone is less than buying a new $650 iPhone, there’s an important detail to consider: a $200 deductible. So, in the case of a loss or theft, you’d actually pay $356 per year ($156 for insurance plus the $200 deductible).
Even though $356 is still less than a new $650 iPhone, there’s another catch: Sprint could replace your lost or damaged phone with a refurbished one. So, you might end up with a used phone instead of a brand-new one.
Now, let’s put everything into perspective. The TEP service is costly, the deductible is high, and there’s a chance you’ll receive a refurbished phone. You can buy a used phone online for less than $356. Sprint even sold refurbished iPhone 5s models for $300. It would be cheaper to buy an older model phone for $300 than pay for TEP and a deductible ($356) in just one year.
If we extend this over two years, you’d pay $312 for TEP and a potential $200 deductible, totaling $512. That’s only $138 less than a new $650 iPhone. For three phones, the numbers don’t add up. If something happened to all three phones in one year, you’d pay $1,068. After two years, that’s $1,536. You could almost buy three new iPhones for that amount.
Moreover, after two years, phones lose their value significantly. Ask your cell phone provider about the trade-in value for a good laugh. Once your device is paid off, equipment protection seems unnecessary and you’re just wasting money. Continuing such coverage is like keeping full-coverage auto insurance on an old, low-value car—it doesn’t make sense.
Looking at the numbers, Sprint’s Total Equipment Protection service doesn’t seem worth it. Many sources, like CNET and PC Magazine, agree. Even if one of our phones needed replacement in two years, buying a used phone for around $300 would save us $936 in TEP costs and a potential $200 deductible, totaling $1,136 in savings.
When I tried to remove the $13 TEP coverage from our revised plan, Sprint made it mandatory for the first month. This seems like a tactic to make customers “forget” and continue paying extra fees.
If you feel strongly about insurance, the most sensible approach is to have it for the first year when your phone is most valuable. Beyond that, the phone’s value drops and it’s not worth $356 annually.
Sprint does offer lower-cost coverage plans with higher deductibles, but you’re not limited to your cell phone provider’s options. There are many affordable alternatives out there. Just be sure to read the fine print, as not all plans cover theft or water damage. Remember, there always seems to be a catch with insurance!
