Pet insurance can offer peace of mind for dog and cat owners, but deciding whether it’s right for your pet and choosing a plan requires some homework.
Why purchase pet insurance?
Today, pet owners can find insurance policies that fit almost any need, breed or budget. You can even customize some policies to your exact requirements or pet care situation.
Another reason you may consider purchasing pet insurance is that the standard of pet care continues to rise, with more sophisticated treatment options and testing, such as CT scans and MRIs. These procedures and many serious emergency treatments are performed by veterinary specialists, who on average charge higher rates than general vet practitioners.
But do you need pet insurance?
Petplace.com, a website devoted to pet health, estimates that 92 percent of dogs will have a severe medical situation during their lifetime.1 And of the roughly 160 million dogs and cats in the United States, fewer than 1.4 million were insured at the end of 2014, according to the North American Pet Health Insurance Association (NAPHIA). The group also reported at the time that 84 percent of insured pets in the United States were dogs and 16 percent were cats.2
Ultimately, the decision comes down to your perspective on the issue, your pet care needs, and your financial situation. For Laurie Hailstone of Abington, Massachusetts, the decision to purchase pet insurance was easy. After her family brought home Maggie, an 8-week-old Italian Mastiff/German Shepard mix, she found that her vet offered a 30-day pet insurance trial. It was a nice perk. (Related: Building your financial pyramid)
But it was when Hailstone considered that Maggie was a large breed and that she planned to exercise her extensively, that continuing the pet insurance seemed a small price to pay for reassurance.
“If I want my car to be protected, I cover it. Why wouldn’t I do that with my dog?” she said in an interview. And it’s paid off. Within a one-month span, Maggie had three emergency vet visits: when she tussled with another dog at the park, swallowed a large toy, and had an unrelated gastrointestinal issue. Two thousand dollars of veterinary treatment cost Hailstone just $200.
NAPHIA stated that the average pet insurance policy costs about $433 annually or $36.08 per month for dogs.3 Cats are less expensive to insure, but you’ll want to request a quote from a provider because rates may vary by breed.
Breed is just one variable when pricing a policy; veterinary experts and professional organizations suggest you should also consider:
- Coverage: Pet insurance policies differ from provider to provider, so compare them carefully or consult a legal professional for advice. Also, policies may only list what is covered – ask your vet for his or her thoughts on what’s missing from the policy.
- Copays: If you’re familiar with how your own health insurance works, pet insurance copays aren’t all that different.
- Deductibles: You’ll find yearly or per-event options. Which is best? It depends on how often your pet will visit the vet and how much out-of-pocket money you’re comfortable paying per visit. Many policies allow you to choose the deductible amount — lower deductibles result in higher premiums, higher deductibles offer lower premiums. Find what works for your budget.
- Reimbursement: Plans reimburse based on either a percentage of invoice or a benefit schedule.
- Caps: Policies may cap benefit payouts over the pet’s lifetime, annually, per-incident, or even per body system (meaning there may be a cap on treating your cat’s digestive tract or your dog’s skeletal system). For per-incident caps, it’s important that your vet clearly documents what each test or procedure is for, because insurers may lump conditions into one incident, which means you’d reach that incident cap more quickly than if each activity were part of a different instance.
- Exclusions: There are breed-specific and general exclusions. Here are a few: pre-existing conditions, hereditary and developmental issues, preventive care, obesity, and examination fees. And like many health insurance policies, experimental procedures may not be covered.
- Additional coverage or riders: Routine care or coverage for breeding are just two of the add-ons available through insurance carriers. If you have special needs, look into a customizable plan.
- Coverage network: If you travel with your cat or dog, look for an insurance policy that covers a network of vets, not just your local provider. And make sure your vet qualifies under the plan: some plans approve American Veterinary Medical Association members, but not Humane Society Veterinary Medical Association members.
With so many variables and pet care provider options, you may want to search online to find highly rated insurance plans. Read the reviews carefully to understand if the reviewers’ situation matches yours.
In defense of not having pet insurance
Kerry Newcomb of Stratford, Connecticut, a Shetland Sheepdog enthusiast, has never purchased pet insurance. Her pack has ranged in size over the years, with as many as eight at one point. She currently has three dogs in her care: Payson, Cody, and Chile. As somebody who grooms and has experience as a veterinary technician, she feels comfortable being more hands on than most owners might. Also, she has a large network of breeders, professional handlers, and trainers who share their experience and knowledge freely.
Still, she noted in an interview, “I know there are issues that only a vet can take care of.” Newcomb manages vet costs by taking her dogs to a clinic with free vaccines but uses her regular veterinarian for annual wellness exams and emergency care.
This may be more legwork than most pet owners can put in, but it’s an option to reduce cost without sacrificing a pet’s well-being.
Another alternative to pet insurance includes opening a line of credit to cover the deductible portion of treatment. This allows pet owners to budget for care and pay off the balance and associated interest or fees as they’re able.
Self-funding pet care
Some pet owners decide to self-fund their pet care, creating a dedicated savings account into which they make regular deposits. This is comparable to the same principle that the insurance industry is built on – collect premiums, hold them in an interest-bearing or investment account, and pay out when necessary.
On paper, self-funding seems attractive, because insurance companies are able to turn a profit operating this way. But remember, insurance companies spread the risk over many policyowners at different durations. You may have just that one little dog or cat, so you are basically making a single bet on your pet’s health and hoping nothing catastrophic is coming its way.
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1 Petplace.com, “Top 10 Dog Emergencies,” Sept. 27, 2015.
2 North American Pet Health Insurance Association, “State of the Industry Report,” 2015.
3 North American Pet Health Insurance Association, “Pet Insurance Takes Bite Out of Vet bills, Nov. 9, 2015.