When To Buy A Warranty For Your Latest Expensive Purchase

PocketPC Thoughts reports that:

This holiday season, shoppers are expected to spend a whopping $1.6 billion on extended warranties for laptops, flat-screen TVs, other electronics, and appliances. And almost all of it will be money down the drain. Retailers are pushing hard to get you to buy extended warranties, or service plans, because they’re cash cows. Stores keep 50 percent or more of what they charge for warranties. That’s more than they can make selling actual products.

I read something in the summer about insurance that tells you when to buy it. Policies are priced so that the insurer makes a profit even in the event that x% of policyholders make a claim. It’s like going to a casino and playing blackjack, where you should never buy insurance – the table only offers you insurance as the odds are you won’t need it and you’ll waste your money.

So when should you buy insurance? Only when you can’t afford to replace the product if it breaks down. If you can afford to replace it, then don’t buy the insurance and keep your premium.
More: PocketPC

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