how much should the 5-year warranty be? worth to buy or not?

1. On my car contract, the dealer added the LoJack for $1000. Then I think I don't need LoJack at all, so I talked to the dealer to cancel it. The dealer didn't agree to cancel but said I can exchange it with the 5-year warranty at $1500. Then I need to pay the additional $500.
Is it worth to do this exchange?

2. he also mentioned "Warranty" can be canceled. I was wondering if anyone has the experience of canceling a warranty? If cancelling, does the cancellation go thru with Honda corporate or with Honda dealer? Is it easy to cancel and get the full refund?

3. Who is the 5-year warranty provider? Honda itself or the 3rd party?

Thanks!