Do You Really Need AppleCare for Your New iPhone 6?

Are you planning on buying the new Apple (AAPL 0.64%) iPhone 6? Sure, the phone has some great features, but for $199 for the basic 16GB iPhone6 to $499 for the top-of-the-line 128GB iPhone 6 Plus after subsidies, it's definitely one of the more expensive phones on the market. And to protect your investment, you have to shell out an additional $99 to enroll in AppleCare.

Or do you?

Source: Flickr.

Many consumers don't realize that a lot of credit cards have "cellular telephone protection coverage" built in to their perks, which can reimburse you if your phone is lost or stolen.

What credit cards have this excellent benefit, what exactly is covered, and how many times can you use the benefit?

How does it work?
Basically, all you need to do is use the eligible credit card to pay for your monthly cellular bill. You'll be automatically covered for every month you do so, even if you didn't use the card to buy the phone itself.

And if your credit card already offers you an extended warranty or purchase protection, this coverage is in addition to anything else your card offers.

The exact details vary by bank, but here are the full details of Wells Fargo's (WFC -0.26%) cellular telephone protection benefit, including exclusions and procedures for submitting a claim. Compare this with your current phone insurance plan to see which offers more and which seems more hassle-free.

How much is covered?
Personal-finance website MagnifyMoney.com recently reviewed the coverage of more than 25 banks and credit unions and discovered that coverage ranges from $200 to $600 per reimbursement.

By far, $200 is the most common amount, offered by a variety of credit unions and national banks, including Fifth Third and Fidelity. Wells Fargo is the only bank to offer $600, and First Citizens and Hancock Bank are close behind at $500 each.

Here is a sample of banks that offer coverage and how much their maximum payout is, per claim. If you don't see yours on here (the list of credit unions is actually pretty extensive), check with yours to see whether it offers this coverage.

Even better than AppleCare?
In many ways, the cellular telephone protection coverage these credit cards offer is far superior to AppleCare.

For starters, the deductible is lower in most cases. Wells Fargo charges only $25 per claim, and many of the other banks charge $50, well below AppleCare's $79 deductible.

And you can file a claim up to twice a year, every year. In contrast, AppleCare will cover you for just two years and will cut you off completely after two replacements, even if you're still within the two-year timeframe.

Do you need cell phone insurance after all?
Bear in mind that $200 or even $600 may not be enough to replace a high-end phone. Without a new agreement, new iPhones start at $649 and go up to more than $800 for the most high-end models.

And other high-end phones have similar price tags. For example, Samsung's popular Galaxy S5 costs $649 to replace. So, if your card provides only, say, $250 in coverage, you could still find yourself on the hook for the other $400 or so.

This is something to definitely keep in mind, and if you're worried about making up the difference, buying an insurance plan for your phone may be a good idea. Or maybe this is the reason to consider switching credit card companies to one that provides a higher amount of coverage.

One thing is for certain, however. Next month, I'm going to start charging my phone bill to my Wells Fargo credit card.