Disappointed to see this is part of your plan.So, my plan is...
Buy the iPhone 4 (32 GB) for $500 (yes, that's the exact price). Than I'll say to the insurrance company my iPhone 3GS is malfunctioning. Battery empty very quickly, or camera doesn't work sometimes, or touchscreen sometimes doesn't work. Something like that: something which is hard to check ("sometimes"). So I get a replacement (or at least refurb) which is as good as new. Than I'll sell that one for $550.
Why go the dishonest route?