We generally don't recommend buying the extended warranty, because most products won't need repair until after the extended warranty coverage ends. But extended warranties can offer real value and additional features that might be worth it to you. Photo by trenttsd.
Harvard Business Review explains the several "peace of mind" benefits of extended warranties:
First, they allow consumers to avoid the anxiety and financial loss of an unexpectedly high repair bill. Second, if a product breaks, consumers do not have to invest time to search for a company to undertake the repairs. It's also comforting to know that if a product is not repairable, it will be replaced. Finally, extended warranties mitigate the concern of being "ripped off" on the repair, because service companies have an incentive to fix the problem efficiently. Bottom line: There's value in being able to sleep well at night.
Although you can set up your own extended warranty fund (put aside the money you would have paid for the warranty), chances are that amount won't be enough to cover a full replacement if it's an expensive product. (The 3-year AppleCare plan for MacBooks is $279, for example. If your MacBook or a part in your MacBook is beyond repair, Apple will replace it — which you wouldn't be able to do yourself with just $279.)
Additionally, Harvard Business Review adds that some extended warranties come with additional benefits such as next-day on-site repair or replacement. This can be invaluable if your work depends on whatever you're replacing. (And it's one of the reasons I like business laptops over consumer ones: better warranties.)
All that said, on a strictly financial basis, extended warranties are like every other insurance product: They benefit the issuer rather than the consumer more and can feel like a waste of money if you never use it. And, like other insurance products, it's all about your risk tolerance and if you're willing to pay more for peace of mind and convenience. There's no right or wrong answer.
Consumer Reports Is Wrong About Extended Warranties [Harvard Business Review]