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Managing my money for young adults
Managing my money for young adults

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3  Your phone contract and insurance

This is a photograph of three people holding their smart phones.
Figure 2

There’s a huge market for phone contracts. For a lot of people still at school their phone bill is their largest expense.

There are two questions that you need to ask yourself:

  1. What should I take into account when I choose a contract?
  2. Does it make sense to insure my phone?

Choosing a contract

Your first step: check out the contracts on offer from a comparison website. Carefully record the details on the different contracts. Often comparisons between deals are not straightforward.

Here’s a checklist.

  • Cost each month if you want a monthly contract, or call tariffs for a pay-as-you-go deal?
  • Length of contract? Usually from 1 year to 3 years. Cost for a monthly contract falls the longer the deal you sign up to.
  • Data allowance?
  • Overseas tariffs (if you expect to use your phone abroad)?
  • A good network? Does it have UK-wide coverage and a strong signal?
  • Will you be able to use apps that will reduce the monthly cost?
  • Is it worth just having a SIM-only contract instead of getting a new phone?

If you’re thinking of renewing a contract with your current supplier be prepared to haggle over the new deal – and be prepared to switch if you can secure a better deal with a new supplier.

Should you insure your phone?

Buying insurance for a phone is not cheap. The cost typically varies from £5 to £15 per month.

So you need to do some ‘cost–benefit’ analysis.

  • When you get insurance cover, what exactly are you getting cover for?
  • Does this cover justify the cost?

The most basic phone insurance covers you in case your phone is lost, stolen or broken.

More expensive insurance policies provide cover for unauthorised calls, accidents and phone accessories including apps and games. Protection overseas might also be included.

But policies will exclude a number of situations where you will not be covered. These are called ‘exclusions to the cover’. They could include damage resulting from carelessness, theft of the phone when it was left unattended or water damage. Exclusions might also apply if there’s delay in reporting your phone lost or stolen.

So before you sign up check what’s in the cover and what’s not.

Activity 2  Choosing a level of protection

Timing: Allow about 5 minutes

What influences would make a real difference in helping you decide whether to sign up for cover? Make a list and keep a record of what you decide.

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First, check whether you already have protection through a home contents insurance policy for the family home. If you have a bank account, check there too. Some banks and building societies offer free phone insurance to their customers.

Next, if neither of those solutions covers your phone, run through these statements to see if any applies to you.

  • I have a history of lost or broken phones.
  • I am (genuinely!) very reliant on the phone – and I need to be able to replace it quickly (in this case make sure the insurance contract offers speedy replacement).
  • I have a very expensive smartphone.
  • I could not afford to replace the phone myself.

Are you any closer to deciding whether or not to take out insurance cover? The greater the number of statements that apply to you, the more insurance cover would make sense.