Should I Purchase Pet Health Insurance?

As I have mentioned before on this blog, I help out with fostering dogs in a dog rescue where I live.

The story below came in from Jim, a subscriber of this blog, who also partcipates in dog fostering.

During a recent visit to the animal emergency hospital (the foster dog was having seizures), the doctor at the hospital informed Jim that it would be at least $2,000 – $4,000 just to stabilize and treat the dog’s condition.

Unfortunately, when the costs are this high to treat a dog’s condition, the question then becomes whether or not the dog should be euthanized. This is a very tough choice to make, especially since that magnitude of money can be used to save many other dogs out there that are being put to sleep each day in shelters around the country.

While dog owners can be argue that it is slightly easier to make this decision with rescue dogs that haven’t been in your family for years and years, it none-the-less got me thinking about the cost of pet health-care.

Previously on this blog, I have covered several aspects/issues involving ownership of dogs, cats, and pets in general. A summary of these topics and links to the articles I have written can be accessed below:

However, I did not get in to the financial ramifications of major medical care for pets, and what sorts of solutions are available for pet owners to help pay these expenses through pet insurance.
This will be the topic of today’s post.
While it has been a commonly known fact (and indeed the highest ranking priority on the My Personal Finance Journey Account Hierarchy) for quite some time that EVERYONE needs health insurance, the idea of pet insurance being available is fairly new.
In my opinion, there are several key factors contributing the rise of pet insurance:
  • Pets becoming less of functional “tool” and more of a friend, companion, and part of the family.
    • Because of this deeper connection, pet owners are now more likely to fork over large portions of cash to keep their pet alive.
  • The rising cost of health care in general.
    • Even though there has been a lot of media coverage in recent years about the rising cost of health care and pharmaceuticals, I believe that people tend to forget that these costs have directly carried over to veterinarian clinics as well. In fact, if you look at the parent companies of most of the animal health products, they are the same companies that provide their products to humans.

Because of these factors, a need has arisen to understand pet insurance and if it is a viable solution for your conmpanion’s health-care needs.

What is pet insurance?

First, I was fairly surprised to learn that pet insurance is actually a form of property insurance. It is not a spin off / adaption of a human health insurance policy. See the link below for more details.

Wikipedia.org – Pet Insurance

Additionally, I learned that there are two categories of insurance policies for pets: non-lifetime and lifetime.
  • Non-lifetime coverage insures the pet for most conditions suffered by their pet during the course of a policy year but, on renewal in a following year, a condition that has been claimed for will be excluded. 
  • Lifetime coverage covers a pet for ongoing conditions throughout the pet’s lifetime so that, if a condition is claimed for in the first year, it will not be excluded in subsequent years.
Several different types of policies are avaiable for pet owners, depending on the type of animal you own. Typical policy categories include:
  • Dog
  • Cat
  • Birds and exotic pets
    What types of things does pet insurance cover?

    In general, pet insurance plans can be amended to suit your needs and cover many different types of health-care treatment. Some examples are listed below.
    • Accidents
    • Illnesses
    • Lab tests
    • Surgeries
    • Cancer
    • Hospitalization
    For a detailed list of the conditions that pet insurance can cover, check out the link below I obtained from Petinsurance.com
    In analyzing the different types of pet insurance, I also found that you can choose to obtain routine health care coverage as well as insurance for major medical incidents. Routine care would include costs of treatment for annual check ups, spay/neutering, etc.
    In my mind, this goes against the rule that insurance should only be used to safeguard against financial catastrophes. This topic was discussed in my previous post about homeowner’s insurance.
    Since routine care costs are low and will not cause any one to go bankrupt, I am opposed to this form of policy amendment.
    How much does pet insurance cost?

    Naturally, the cost of pet insurance will vary, depending on the type of pet you own, it’s age, and any pre-existing conditions.
    Petinsurance.com (a Nationwide insurance company) has a good free pet insurance estimator that you try out by clicking the link below:
    As an example, I obtained a quote for a 1 year old Golden Retriever dog. The results are shown below:
    • Major medical dog insurance policy
      • Monthly premium
        • $500 deductible, $22 premium
        • $250 deductible, $27 premium
        • $100 deductible, $31 premium
        • Maximum yearly benefit = $14,000
    • Routine care amendment to policy
      • $22 extra per month. Wow!

        Since insurance should only be used to safeguard against financial catastrophe, I would most likely choose the $500 deductible above.
        While $22 per month seems pretty reasonable, I think it is amazing that adding the routine coverage nearly doubles the premium cost. Incredible!

        How do you determine if you need pet insurance?

        In my mind, I think that the key to this answer lies in figuring out your own self. (What’s that saying? Know thy self.)
        What I mean by this is that you have to figure out if you fall in to one of two categories…
        • Category A –
          • Are the type of person that will feel emotionally destroyed if your pet died from a medical condition that you could not afford to treat.
        • Category B –
          • Are the type of person that believes that pets should be loved while they are alive, but that if they get hurt, it is just their time.

            If you fall in to Category B, I would say that should not buy pet insurance.

            If you fall in to Category A, you should think about doing the following steps:

            • Examine the list of costs for common health problems at the link below for your pet.
            • If you cannot readily afford to pay the costs for severe problems that may come up (like a slipped spinal disc), you should purchase pet insurance.  

            How about you all? Do you use pet insurance? Has it worked well for you? Have you had any problems?

            What are the key things to watch out for?

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            Comments

            1. Kathryn says:

              I have yet to find a pet insurance policy that makes economic sense. Especially when you consider that pets tend to have more medical problems in their later years.

              If you assume that your cat won’t have an issue until they are 8 years old, then you could, in theory, bank the $44/month that you would spend on care as described above. That would allot you $4224 to spend on the pet’s medical care at year 8.

              Assuming you spend an average of around $125/year on routine items and things that come up here and there, you would still have enough to cover $3724 of medical care for potential problems at year 8 (since you’re going to pay the deductable regardless I’ve assumed you’d have that on hand). And, if nothing happens, then that’s $3724 additional dollars you haven’t sunk into somebody else’s pocket.

            2. well, for me it is not necessary enough to purchase pet insurance as long as we keep controlling our pet. And also it depends on pet we have. It is suggested to find a pet that maintained easily.

            3. Thanks for reading PFT! So you encourage annual checkup and such as a way to keep the pet in good health to prevent large problems from occuring?

            4. Jane @ best cc says:

              I had a dog and I know how high is medical expense. If dog owners have an opportunity to purchase pet health insurance then it's good. There are so many people in this country who can't afford health insurance for themselves. A pet health insurance is far behind…

              • That's a good point Jane! Definitely, pet owners have no business get pet insurance unless they are comfortably affording their own bills!
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