Just remember, things still have to breathe.
For example, several years ago waterproof jackets where completely water resistant. The issue was that as water could not get in, it could not get out, and the sweating became an issue for the wearer. That brought on the wave of Gortex products.
Many of the best insulations kits are spongy, with many swiss-cheese holes. Basements are damp, and a house "breathes" as the temperatures rise and fall with day and night, and then the change of seaons.
My Dad was the executive engineer for Master Lock. He had the same concerns, and like everything he did, he investigated it to death--both in terms of performance, but also in terms of cost.
He chose long slats of hard styerofoam, and affixed them around the tank leaving small gaps. He did wrap pipes, but only in places where the pipes would "weep" during temperature changes.
They lived in that house for 30 years and never had a damp basement, but lots of hot water and functional central air.