Could Pet Insurance Save Your Best Friend’s Life?
By Maura C. Schauss, CFP®
You take the leash off for just one second and your beloved retriever runs after a squirrel and right into traffic. You hear the screeching tires and the thud of impact. In shock, you run over to find your faithful companion laying on the pavement whimpering. After triage, the veterinarian comes to you with a somber look. The good news is, it doesn’t have to be fatal. However, life-saving surgery will cost $10,000. What do you do? Are you prepared for an expense like that? If not, you may want to a pet insurance policy as part of your overall financial plan.
Pet insurance is a healthcare policy for your pet, much like the health insurance we have for humans. You pay a regular monthly premium, which usually comes out to several hundred dollars a year. Then, if something happens to your pet or it gets sick, the insurance company will help cover the cost of treatment. This protects you against huge veterinary bills or from having your pet put to sleep because you cannot afford the care.
You may still have a deductible, typically between $0 and $1,000, that you have to pay before the insurance starts providing benefits. Once your deductible is met, the insurance will pay between 50% and 100% of the costs, depending on your plan. In addition, most insurers have an annual maximum that they will pay, and anything above that you will have to pay for yourself.
Just like our human health insurance, pet insurance is limited in the conditions and treatments it covers. Each policy varies, so it is important to read the fine print. The most common exclusions, though, are pre-existing or hereditary conditions, dental disease, hip dysplasia (which is very common in dogs), behavior issues, routine check-ups, preventive care, and grooming. Other than that, most accidents and illnesses are usually covered, at least partially.
While pet insurance is a lot like our human insurance, there are some differences. The most notable difference is in how benefits are paid out. With our health insurance, our doctor or other care provider bills the insurance company directly. With pet insurance, the pet owner pays for everything up front and then gets reimbursed by the insurance company.
Also, pet insurance companies have some safeguards in place to prevent people from purchasing insurance when their pet is already sick. There is usually a waiting period from the time you purchase the policy to when the illness coverage begins. There is also a waiting period for accident coverage, but it is often only a few days. Your pet will be required to get a check-up in order to establish any pre-existing conditions before the insurance coverage becomes effective.
Premiums are affected by the coverage you want, the kind of pet you have, and where you live. The more coverage you want, the higher your premiums will be. Also, lowering your deductible or raising your annual maximum will raise your premiums. The more risk the insurance company takes on, the more they will require you to pay.
Insurance companies also study which kinds of pets generate the highest veterinary bills. This means that premiums will vary depending on your pet’s species, breed, age, and location.
Dogs cost more to insure than cats and, at least among cats and dogs, males cost more to insure than females. Larger pets have shorter life spans and higher medical costs, so they also cost more to insure. Younger animals are usually healthier, so premiums go up the older your pet is. Finally, veterinary costs are higher in more developed and urban areas, so the premiums are raised to match that.
So, should you purchase pet insurance? There are a few things to look at when considering your options. First, does your pet have a pre-existing condition? If so, insurance may not help very much. Then, can your monthly budget handle the insurance premiums? Your cash flow will have a big effect on how much or even if you can get pet insurance.
Finally, are you prepared for an emergency? Do you have cash reserves or an emergency fund that would be able to withstand a veterinary surgery costing several thousand dollars? If you have healthy reserves, you may not need an insurance policy to cover unexpected accidents or illnesses because you can self-insure. However, if you don’t have an adequate amount of money set aside, such an accident or illness without insurance could force you to put your pet down.
It is important to look at how veterinary expenses and pet insurance fit into your overall financial plan. If you want expert guidance as you consider making pet insurance a part of your financial plan, or even if you need to develop a plan in the first place, we can help. Call our office at 703.584.2700 book an initial consultation with us or email firstname.lastname@example.org.
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