I did the math and the price is exactly the same as buying the Phone with AppleCare+ outright, just spread out. And there's no penalty for paying off the balance early. So there's really no reason not to go the Apple route unless you just don't want to add to your debt.
If you did decide to sell your phone on Craiglist instead of trading it, you can just pay it off and do that; you're not obligated to trade it it. When the 8 comes out next year with its OLED screen and whatever else, if I decide to upgrade I'll look at the price delta between trading (which essentially sacrifices the payments you've made over the past year) or reselling. If it's bigger than $100, I'll likely buy out the loan on the phone and sell it. If it's $100 or less, I'll probably just go for the convenience of trading.
That doesn't cover equipment failure, though, right, though, just theft or damage? If my battery is suddenly only holding half a charge or my digitizer becomes intermittent (both failures I had my 6 Pluses this year), homeowners insurance won't cover repairs, will it?