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Kentucky High School Financial Planning Home Page |
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HSFPP Weekly Update 137—Cell Phone Insurance is it worth it?
Message from Bob & Chris: This week’s update emphasizes the importance of insuring only what you cannot afford to pay out of your pocket. A good example of this is cell phone insurance. The premiums and deductibles together nearly always cost more than the cheap, used, or refurbished phone you get if your original phone is lost, damaged, or stolen, unless this happens immediately after you purchase the phone. According to this week’s article In the New$..., cell phone insurance is only worthwhile if you have an expensive phone—such as one that also functions as a personal digital assistant (PDA)—that costs significantly more than the amount you would pay for insurance. We also focus on the need to understand and ask questions before you sign any contract so that you understand the terms, your rights and responsibilities, and any restrictions of your rights and responsibilities.
Related Updates:
Update #91 - Uninsured Young Adults - 19 April 2004
Update #49 - Uninsured Rising - 20 February 2003
Update #35 - Vehicle Insurance - 28 October 2002
Update #27 - Disability Insurance - 3 September 2002
Website Pick of the Week:
http://www.doi.state.ky.us/kentucky/documents/news/web/web_quiz1.asp
The Kentucky Office of Insurance Web site features quizzes on several types of insurance. Answers are provided with explanation. A unique feature of their quizzes is that you get extra points for providing the correct answers quickly. These quizzes thus provide excellent practice for the LifeSmarts Contest. Further details about this year’s LifeSmarts contest will be in highlighted in next week’s update.
Activity for Educators:
Use the first set of discussion questions before handing out this week’s article In the New$.... Next have teens read the article and then use the discussion question that follows the article.
Discussion Questions:
1.) Do you have a cell phone? Yes ___ No ___
2.) If you have a cell phone, do you have cell phone insurance? Yes ___ No ___
Explain why you do or do not have insurance on your cell phone.
3a.) If you have cell phone insurance, have you or parents tried to replace your cell phone, either as a result of its being lost, stolen, or damaged?
3b.) If Yes, please share with the group your or your parents’ experience with replacing the cell phone.
3b.) If No, do you know if your insurance will pay to replace your cell phone if it is lost, rather than stolen?
Additional assignment: For extra credit or as a separate assignment, you might want to ask those teens or parents who have a cell phone contract to read it and report what they find, especially regarding consumer rights, responsibilities, and any restrictions on those rights and responsibilities.
1a.) How long are you required to keep the contract for your cell phone plan?
1b.) What will it cost to cancel your contract $_________
2a.) Does the contract include cell phone insurance? Yes ___ No ___
2b.) If you have insurance, can you cancel the insurance at any time? Yes___ No___
If No, are you required to keep this insurance until the contract expires?
In the News: Is Cell Phone Insurance Worth It?
“Oct. 2--Have you ever thought twice about shelling out a monthly fee for cell phone insurance, worried that the coverage is a bad deal?
“You're not alone. According to a class-action lawsuit filed in federal court in Miami, cell phone insurance is a rip-off, pushed by cell phone equipment insurers using ‘deceptive and outrageous’ practices.
“For a typical monthly fee of $4 to $5, insurers promise to replace subscribers’ lost, damaged or stolen phones, less a deductible generally ranging from $35 to $100.
“The rub, according to the suit, is that phones are replaced with cheap, used or refurbished phones, resulting in customers ‘unwittingly’ paying more in the form of a so-called deductible than the phones they get are worth.
“The insurers are being sued for unfair trade practices and other violations for ‘falsely representing that the purchase of wireless phone protection provides a benefit.’”
“The complaint also takes aim at monthly premiums, saying they are deceptive because they don't actually insure property in the event of a loss.”
“The suit also accuses the insurers of imposing unlawful and unfair conditions for filing a claim, including requiring a police report even if a phone is lost instead of stolen.”
“Consumer Reports’ MoneyAdviser newsletter concluded last year that considering monthly fees and deductibles, the coverage ‘works best for people who buy an expensive phone and lose or destroy it almost immediately, or better yet, lose it twice in 12 months. Lose it more often, and the insurer may cancel your policy.’”
Source: Adapted from “Is Cell Phone Insurance Worth It?” by Patricia Sabatini, Pittsburgh Post-Gazette, 10/02/05. Available on the Web at:
http://www.rednova.com/news/technology/259611/is_cell_phone_insurance_worth_it/index.html?source=r_technology
Activity for Students:
Read the article, “Is Cell Phone Insurance Worth It?” Then answer the discussion question below.
Discussion Question:
Now that you’ve read the article, would you buy cell phone insurance for a modestly price cell phone? Yes ___ No ___
If yes, under what conditions would you buy cell phone insurance?
Kentucky High School Financial Planning Program
http://www.ca.uky.edu/fcs/hsfp
The purpose of this Web site is to assist county extension agents, credit union educators, and high school teachers in improving the economic well-being of our constituency, beginning with today’s students; and also, to assist teachers in Kentucky in meeting KERA’s goal that all students become technologically literate. Weekly Updates are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators.
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