Three main options:
1) iPhone Upgrade Plan (ordered thru Apple Store) - includes AppleCare, has to go on a credit card (no debit card), so then AT&T plan is then just data/minutes/etc. Only available in a 12 month plan in order to receive the next iPhone.
2) AT&T Next + AppleCare (ordered thru Apple Store OR AT&T website). AppleCare is paid in full at time of purchase. Monthly Next payments are in addition to standard AT&T bill.
3) AT&T Next + Mobile Insurance (ordered thru AT&T website) Mobile Insurance is a monthly cost on top of next payments. Not as comprehensive as AppleCare.
I have the ATT mobile insurance and it covers more than AppleCare does, theft and accidents, like losing it or dropping it in water. But, it's whatever you feel more comfortable with
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