If you buy a new appliance or computer, odds are you’ll get the “hard sell” to buy an extended warranty. They’re a great deal! (for warranty companies!) Host Rob West weighs in on this topic.
Did you hear the one about the 95-year old guy who refused to buy an extended warranty? The perplexed salesman asked him, “Why not?” He said, “Sonny, at my age, I don’t even buy green bananas.” If you buy a new appliance or computer, odds are you’ll get the “hard sell” to buy an extended warranty. They’re a great deal…for warranty companies! Host Rob West weighs in on this topic.
Instead, you should “self-insure” appliances and items of similar cost. You’re much better off using money from your emergency fund to replace a needed item.
You probably have insurance on the products already. Most have some type of manufacturer’s warranty. Factor that in when you shop around for an item. An item with a long manufacturer’s warranty period is probably a solid product to begin with.
The fine print. There are usually pages of it for most extended warranties, and legions of lawyers write these agreements to protect the warranty companies. If even one exception applies, your claim will probably be denied. Remember: warranty companies don’t make any money by paying claims, they make money by not paying them.
Depreciation. Just like with a car, your appliance or computer will depreciate starting the minute you buy it. So, it’s worth less to the warranty company than it is to you.
Believe it or not, many people simply forget they have the coverage. So, they end up never filing a claim. If they do happen to remember their extended warranty, they’ve lost or misplaced that paperwork that proves it. So again, they don’t file a claim. Either way, a lot of covered losses go unclaimed. All of these are reasons why you’re almost always better off financially not getting an extended warranty.
There is one exception, and this applies to expensive items like video game equipment, iPads or cell phones. When there’s a good probability a screen will crack or a remote will be repeatedly dropped on the floor, extended coverage may then be worth the money.
On this program we also answer your questions:
In light of COVID-19, where is the safest place to invest my money?
Regarding gifting, what can you advise regarding an estate planning attorney?
I’m retired and am pretty well off and I want to give to my children. My kids don’t want to put me in a perceived bad position so they’re hesitant to receive my money! Are there any biblical principles about receiving?
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