Since your pet is a member of your family, you may want to treat your pet like one when it comes to insurance.
Pet insurance can help you manage financial risks and protect against the unexpected. When it comes to the cost of caring for your pet, veterinary fees can be significant.
According to the American Kennel Club, the average annual cost of owning a dog is about $2,500. This includes everyday expenses such as food, supplies, and veterinary care. Emergency procedures, medications, surgeries, hospitalizations, etc. can increase those costs. For a single accident or illness, especially for more complex conditions, treatment costs can easily exceed several thousand.
However, less than 2% of the 151 million dogs and cats in the United States are insured, according to a report by the North American Pet Health Insurance Association.
As a financial planner, I know the importance of using tools like insurance strategically to protect your finances and health should something happen. Here's why I think pet insurance is non-negotiable for pet owners.
weigh the risks
A common argument I hear about pet insurance is that young, healthy animals with no chronic illnesses don't need insurance. Why not insure yourself and cover the bills yourself in case something happens?
I always ask, “If the treatment costs a total of $5,000, how much are you prepared to pay?” Or $10,000? At what point does saving your friends become less of a consideration?
Cats and dogs quickly become part of the family. When our furry friends get sick, we often scrounge up something to treat them.
Accidents can happen even if you don't want to think about it. Even if your pet is healthy, there's always a risk that an unfortunate accident could occur and result in thousands of dollars worth of medical bills. Pet insurance can ease that financial pain.
It helps to know in advance what health risks a particular breed faces. Some people are more prone to diseases such as joint problems, heart disease, and cancer. Knowing this information in advance can help you accurately estimate future costs and find the right insurance plan.
Most pet insurance plans cover high costs
Many people think that pet insurance doesn't cover that much. With some exceptions, pet insurance covers treatment for unexpected accidents, injuries, and illnesses.
Most insurance policies will cover costs such as surgeries and emergency medical care.
For example, a common claim is a broken leg or torn ligament due to an injury. Alternatively, your pet may need an overnight stay at a veterinary hospital and further treatment for an acute illness such as pancreatitis. These expenses often amount to several thousand dollars each, but most pets are covered.
However, there are some things to be aware of. Pet insurance does not cover chronic illnesses or veterinary visits that you could have prevented. It also doesn't cover preventive care like teeth cleanings, vaccines, and nail clipping.
Pre-existing conditions may not be covered, but even older pets can benefit in the event of a new accident or diagnosis.
There are two types of pet insurance: illness/injury insurance and accident-specific insurance. Sickness and accident insurance is more powerful, but more expensive. It is important to read the fine print of your policy to know what is covered.
Make sure the math works in your favor
Just like human health insurance, pet insurance also has premiums that must be paid each month to maintain coverage. The average accident and illness insurance premiums for dogs and cats in 2022 were $53 per month and $32 per month, respectively.
Premiums vary depending on where you live, the age and breed of your pet, and the type of insurance you choose. Pet insurance also has an annual deductible that must be met before coverage begins, typically less than $1,000 per year.
When purchasing pet insurance, you should compare different insurance companies to find the best possible price for your needs.
It is also important to know about the rate of return. Once you receive your veterinary bill, you are responsible for paying it and submitting the claim to your insurance company. Most pet insurance companies have reimbursement rates as high as 70% to 90%.
Looking to the future
It's not always fun, but considering all the scenarios can help you choose the best pet insurance for you.
Pet insurance isn't for everyone, but my advice boils down to one important question. It's about being able to comfortably cover thousands of dollars in vet bills. If that gives you pause, it might be worth getting insurance.
The thought of your pet getting sick or injured is emotional, but so is not being able to afford medical care. That's why we recommend purchasing insurance to live with your pet in peace.
