Believe it or not-but pet insurance is the most claimed-for type of insurance, more so than homeowners or auto insurance. Even so, the whole idea is pretty new to American pet owners. Less than 1 percent of 163 million cats and dogs in the United States are covered by a health insurance policy. In the United Kingdom and other European countries, 20-50 percent of the pet population has coverage.
Consumer Reports Isn’t Always Right
Many pet owners wonder if investing in pet insurance is “worth it.” An as alternative, some people advise to simply open a separate savings account for your pet’s medical expenses. That way, if you don’t end up needing the money for expensive vet bills you could spend it on something else-like a vacation to Hawaii.
For example, an article published in 2003 by Consumer Reports says, “The most important thing you need to know about pet insurance is that it is a form of enforced savings that almost never covers the entire bill. You can accomplish the same thing by paying the same monthly premium to your savings account.”
I have to disagree that it can accomplish, “the same thing.”
Yes, the purpose of any insurance is to cover future unknown risks. But you’ll never know which is the better option until after the fact.
Although saving money is always a good idea, how long will it take you to save $3000, $5000, $7000? What if you’re faced with a medical emergency and you don’t have enough money saved up yet? I can guarantee that your pet isn’t going to wait to get sick or injured!
$5000-$7000 is NOT an over-exaggeration of the kind of expenses you might encounter if your pet needs to visit a veterinary specialist or develops a chronic medical condition like diabetes, seizures, or thyroid disease.
Just Punch the Numbers
If you saved $50 a month it would take a little less than 10 years to save $7000 depending on the interest rate for your savings account. Depending on the pet insurance policy you choose, from the first day your policy is effective and for the same $50 a month you could receive $7,000-$14,000 per incident or even $100,000 for multiple lifetime incidents.
Even if by some miracle you have an extra $7,000 laying around to immediately fund your pet’s savings account, your savings will be dwindled down to near zero once your pet experiences one serious medical incident. Then what?
Avoid Benefit Schedules
There are many factors to consider when evaluating the different types of pet insurance policies available. But one of the most important is whether or not the company uses a benefit schedule to reimburse claims. What this means is, regardless of the total cost of treatment, the policy will only pay up to a set figure (not a percentage) per condition.
You’re much better off looking for a policy that covers a certain percentage of the claim (usually 80% or higher) based on the actual cost of the procedure and where you live. This takes into account the higher fees you’re more likely to encounter at an emergency or specialty clinic and you never have to worry about inflation.
Many pet parents have discovered (to their disappointment) that the benefit schedules currently being offered by pet insurance companies have not been adjusted to take into account the recent inflation associated with veterinary expenses.
The fact is, your pet will likely require costly medical care at some point in its life. What would you do if your pet needed sudden medical attention, such as a trip to the emergency clinic, or was diagnosed with a chronic condition such as diabetes?
Both of these could easily cost $2500 or more. Would this cost cause you financial hardship? If you answered yes, then pet insurance would probably be worth it to you.
Some people believe that pet insurance is just another way for insurance companies to get rich. However, any kind of insurance is something that you have–but hope you never need to use. You just never know when you’re going to need it. I’ve seen pet insurance save the lives of pets who otherwise would have been euthanized because of expensive medical bills.