Applecare is sorta a backup plan lol, but in all reality I would get a backup for your data.
What I did with my rocketfish external usb drive which I stuffed a 1TB seagate in it was, I split the drive into 700GB for direct storage, and 300 for time machine backups.
Works great for my needs in all honesty, and I enjoy having the extra storage for my mac if for any reason I don't decide to store it on my server.
But applecare is a must imo, and I need to purchase that soon for my mbp.
Its really a toss up, you cannot go wrong with either purchase. But I also feel that both are a definite must buy. Just sort out what your immediate needs are.