Are you throwing away money on your cell phone protection plan?

Key Takeaways:

• If your phone is fully paid off, consider dropping the insurance.
• Compare annual coverage costs to your phone’s value; if it’s 25% or more, think about canceling.
• Many plans lose their worth once a phone depreciates over time.

Why Coverage Might Not Be Worth It

The fundamental question for many smartphone owners is whether continued coverage is worth the cost. According to insights from the original story, paying for insurance on a phone that is already paid off can often become a financial drain. The recommendation is practical: “If your phone is paid off, it’s probably time to hang up on the coverage.”

Analyzing the 25% Rule

One critical guideline is examining how much you pay relative to the device’s actual value. “If your phone’s value has dropped enough that the yearly cost of a coverage plan is at least a quarter of the device’s value, cancel it.” In other words, a shrinking phone value coupled with a steady insurance fee can quickly become a losing proposition.

Reevaluating Your Phone’s Worth

Smartphones depreciate in value, sometimes rapidly. Over time, the cost of insurance may remain the same, but the phone’s worth continues to fall, meaning coverage can wind up costing a larger percentage of the device’s current price than it once did. Regularly calculating your phone’s market value—and comparing that to what you pay for protection—can be eye-opening.

Practical Steps to Save

For consumers seeking to minimize unnecessary expenses, these observations highlight the importance of periodically reassessing insurance plans. First, check whether your device is still under an installment plan or paid in full. Second, estimate how much a replacement phone of the same model typically costs used. Finally, compare your annual coverage expense to the phone’s worth. If you find that coverage costs 25% or more of its value—or if you’ve simply finished paying off your device—consider canceling to save money.