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Don't forget that your new phone probably already comes with a manufacture's 1 year warrenty. The last phone I had ended up dying exactly one month before the warrenty expired and Sprint replaced it for me, free of charge, no questions asked. Then I got a brand new picture phone, and wouldn't you know it, that one died too. This time they had to upgrade me because my model was discontinued.
All in all, I'd say you definately need a 1 year warrenty, just check if you already have one before handing out for the 'extended' stuff.
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