When it comes to our pets, there’s no denying the lengths we go to ensure their happiness and well-being. From gourmet treats to doggy daycare, we often spare no expense. But when it comes to a vet visit, the costs can escalate quickly. This brings us to a common dilemma: Is pet insurance worth the cost? Let’s explore the pros and cons to help you make an informed decision.
Understanding Pet Insurance
Pet insurance is a type of health coverage designed specifically for pets. Much like human health insurance, it helps cover the costs of veterinary care, which can range from routine check-ups to emergency surgeries. Policies vary widely, but most cover accidents, illnesses, and sometimes preventive care. For an example, Nationwide offers a page dedicated to explaining potential health events and how their related medical expenses are covered by their insurance.
The Pros of Pet Insurance
Financial Peace of Mind: Even if you end up simply breaking even on the whole endeavor, there is value to having peace of mind everytime there is a health event. More of your energy can be focused on your pet vs stressing about the potential costs. Paying even monthly or annual premiums may be easier to finesse into a budget vs handling an unexpected vet bill. That said, the insurance doesn’t typically cover 100%, but it does certainly lessen the blow to something more palatable.
Comprehensive Care: Insurance helps make advanced treatment options more affordable and promotes pet owners to be more consistent in keeping up with preventative care measures. I’ve known plenty of dog owners who forego care measures like cancer treatment given the cost or only see the vet for an emergency. If insurance were available, these care choices would likely be different.
The Cons of Pet Insurance
Cost: Premiums can add up, especially for comprehensive plans that provide coverage for general wellness. Depending on the coverage, breed, age, and health of your pet, premiums can vary widely. You may be wise to a breeds typical health issues (prone to cancer, ear infection, etc), but underwriters are well aware of these issues too. So while it make make sense to purchase insurance for a breed with notorious health conditions, that insight will be reflected in your premium. And as mentioned, premiums are the only thing you’ll pay. You’ll also be responsible for deductibles and co-pays as needed.
Exclusions and Limitations: Most pet insurance plans do not cover pre-existing conditions, so if your pet has an ongoing health issue, it might not be covered. It’s best to get coverage for a puppy before health issues arise, but be aware you may also not really need the policy for a handful of years given their young age. There are also breed-specific exclusions. As mentioned, underwriters are astute to various health issues, the exact reasons you may be considering coverage at all. Certain breeds prone to specific health issues may face exclusions or higher premiums.
Claim Reimbursement Process: Typically insurance companies require you to pay the vet bill upfront and then wait for reimbursement, which can be inconvenient. So if you were avoiding a big charge to your credit card or bank account, that may be unavoidable despite having coverage. Reimbursements should be made within 30 days, with some companies prioritizing reimbursements within a week.
Factors to Consider
Your Pet’s Age and Health: As mentioned, younger, healthier pets typically have lower premiums. Older pets or those with pre-existing conditions likely have higher premiums or be ineligible for coverage at all. It’s hard to know the breakeven on the perfect age to get insurance because even puppies can get themselves into trouble (swallowing things they shouldn’t, getting into an altercation with another dog, etc). But generally, you purchase coverage in the first couple years.
Your Financial Situation: If you have sufficient savings to cover potential veterinary costs, you might not need insurance. I find this coverage very similar to getting a warranty on your phone or car. At best I hope to break even in the transaction, I rarely feel like I’m going to “make out.” You may have 2-3 phones in a row without issue. Or maybe you just need to replace an occasional screen which can be done relateively inexpensively if using a third-party vendor. Not a big deal to self-insure. But then there is that one time you drop it down a sewer grate and now have to come up with $1,000 for a new phone that would have had coverage under a warranty. Let’s say between the monthly premiums and deductible, you’re out $450 vs $1,000. Is it worth having coverage at all times for everyone in your family for that one time it will make sense? Probably not. But does it give you immense peace of mind to know you have it? Then maybe it does make sense to buy. Especially if it’s not a big deal for you to cover the monthly premium and deductible but you wouldn’t be able to cover the $1,000 credit card charge, which now accrues interest. As mentioned, even if it doesn’t always financially work out, the peace of mind + being able to better cash flow these common issues over time is qualitatively valuable.
Type of Coverage: It’s critical to carefully compare policies. Some offer comprehensive coverage including wellness visits, while others only cover accidents and illnesses. Some have a fast turnaround for reimbursements and make the process painless, others take considerably longer. Also be saavy on how great the savings really is. If you’re able to leverage local clinics for various immunizations, etc, you may make out better paying out of pocket compared to going to a vet with an insurance reimbursement. Lastly, keep in mind any coverage caps to the policy. I find this feature of pet insurance very similar to how dental and accident protection policies work. You have coverage – but only up until a certain point. So if you have a bad year and you think… YES! This was a great idea to get a policy, be forewarned it may cap out. Here is a good resource on how to think through how much insurance may be needed.
Alternatives to Pet Insurance
Large & Irregular Expense Budget: Whenever I go through spending with my client we discuss creating a large & irregular expense category. This isn’t a cash or emergency reserve, this is an annual budgeted category to handle things exactly like an unexpected vet bill. But it could also be for new tires, new furnace, hearing aid, dental work – things that commonly happen we just don’t know in what order. I don’t expect anyone will need a new furnace, new tires, and have a major pet surgery in one year, but it’s very likely all these things could happen over the next 5. So we factor it in to be financially prepared. I expect that this category be covered by income sources given we’ve folded it into the budget. Only if the issue is REALLY bad that it exceeds our budget do we then rely on an emergency fund. Many of my clients budget a good $5-15k/year for this category of spending. It really just depends on their lifestyle (maybe they are a family of 5 so there are more cars, more pets, a larger home with extra utilities). So when things like a vet bill pop up I say… don’t worry, we already accounted for that… we’ll just file it under large & irregular expenses for this year.
Savings: If you’re better at saving than you are at budgeting, you could just take whatever you’d pay for a premium and transfer it to a designated savings account to pay for pet bills as they arise. You’re not mitigating the risk of a costly vet appointment as you do when you purchase insurance, but you’re certain to get back what you’ve paid in + interest if using a money market account. And hopefully any cash in the account materially lessens the blow of any big bill so what’s not covered is similar to a deductible.
Discount Plans: Some companies offer veterinary discount plans, which provide reduced rates for services at participating vets. They typically come with an annual membership fee, so you’d have to do the math on whether the expected discounts provided cover the cost or materially exceed the cost of membership.
Conclusion: Is Pet Insurance Worth It?
The answer to whether pet insurance is worth the cost has a lot more to do with your style and preference for covering large & unexpected expenses and little to do with your pet. How often your pet will need care and at what cost is truly unknown. And for breed-specific issues, the cost of care will already be factored into the premium. For some, the financial peace of mind and ability to provide comprehensive care or advanced treatments make it a worthwhile investment. For others, the cost of premiums, deductibles, and exclusions may not justify the expense. Especially for those that aren’t regular vet-goers or wouldn’t entertain the idea of advanced care measures.
Ultimately, the best approach is to thoroughly research and compare policies, consider your financial situation, and assess your pet’s specific needs. Whether you opt for insurance or a savings plan, the goal is to ensure that you can provide the best possible care for your furry friend without undue financial strain.
