Considering I've actually had an Apple Store employee once tell me one of the great things about AppleCare is that you have a whole year to decide whether or not to buy it, so that if something goes wrong during the course of the first year you can always make the decision to get AppleCare and get it fixed.
So at least by your definition, this Apple Store employee was basically telling me to commit insurance fraud?
A product warranty and an insurance policy are two totally different things. Buying an insurance policy on an already damaged item and then filing a claim is fraud, pure and simple.