You: What kind of insurance makes sense to avoid?
When it comes to a genuine calamity such as a major car accident, premature death, or surgery, you’ll be thankful for your auto, life, and health insurances respectively. But there are many other unexpected expenses for which you should not purchase insurance. Fixing a minor fender bender, replacing a busted printer, and making home repairs are examples of expenses that are best paid for out of your existing emergency fund.
You: So what’s the take-away here?
Well, for one, don’t purchase silly in-store warranties.
You: Even for a printer?
If someone offers you a two-year extended warranty for $40 on a $100 printer, think about it. But only for as long as it takes to politely say “No thank you.”
You: Why?
Well, for one thing, the odds are low that your printer breaks during the warranty period, and lower still that it breaks for a reason actually covered. (If you know differently, purchase a different printer.) Even if your printer does break for the right reason at the right time, buying a similar one would also cost about $100. By participating in an extended warranty program, you are saying you don’t want a new printer for $100. Rather, you prefer to pre-pay $40 (a couple of years in advance, no less) to repair a two-year-old printer.
You: Well, when you put it that way, buying a warranty does sound kind of foolish.
Gary: That’s why I never present it that way! Rubin, you’ll never be promoted with that attitude!
You: Gary works at the electronics store?
Gary is everywhere.
You: Wow, who knew you could be harmed by Gary at the mall?!
He can be lurking anywhere. But before long you’ll be able see him clearly and just walk on by with a smile.
You: Sounds good.
One more thing on the printer warranty option: If you buy the warranty, you are also saying that you have plenty of free time so you don’t mind spending it waiting for the repair or engaging in correspondence with the repair company, not to mention a possible shipping expense, and so on.
You: That’s a big hassle.
Yes indeed. So, don’t spend your hard-earned money insuring against minor chances of future small-dollar expenses. That’s not what insurance is for. Those extra dollars you save by not purchasing silly warranties can add up over time and help you live a life Beyond Paycheck to Paycheck without any sacrifice in the quality of your life.
Gary: You are really starting to get to me, Michael.
Good to hear!
“personal finance” 
“financial education”
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