Can Pet Insurance Save You Money?
Our furry friends have it pretty good. They don’t have to worry about jobs, bills, or budgeting. They have us to do it for them!
But if your income is low and your expenses are piling up, it can be tough to afford the costs of pet care. Not to mention a costly emergency procedure or surgery!
For serious situations like that, pet insurance promises to help save your pet and your money. But is it really worth the cost? We spoke with the experts to find out for you (and for Fido).
Pet insurance works like a simplified version of human health insurance: You pay a monthly premium, and if your dog or cat gets sick or injured, your pet insurance plan will cover (most of) the cost of their care.
“The pet insurance industry has grown substantially over the last 20 years, in part because of our changing relationship with our pets,” says Rob Jackson, co-founder and CEO of Healthy Paws Pet Insurance (@GoHealthyPaws). “Pets are a part of the family, with some younger generations opting to have pets instead of human children. We increasingly humanize our pets—buying them clothes, taking them to daycare, throwing them birthday parties. In fact, 14% of the pet parents we surveyed in February 2017 said their pet has their own Instagram or Facebook account! Giving our furry family members the best has led to an increase in spending, sparking incredible growth in this industry.”
For someone who’s already on a tight budget, pet insurance might seem like an unnecessary added cost, but there are plenty of benefits to using an insurance model to cover costs for pet care. If you’re never heard of pet insurance before, this primer should answer most of your basic questions.
Why is pet insurance a thing?
In short: It’s a thing because pet care, like people care, has seen a lot of advances in recent decades – and those advances can be really expensive. So while this means that your beloved cat or dog is likely to live much longer than they would have previously, that longer life probably won’t be free.
According to Chris Ashton, co-CEO of Petplan pet insurance (@Petplan), “The cost has increased significantly, but for good reason. The past few decades have seen amazing innovation within both the medical and veterinary communities, and today there are few treatments in human medicine that are not also available to our pets. Veterinarians can perform hip replacements. They can administer cyberknife radiation to a cancer patient. They can perform acupuncture to ease pain after surgery. They can 3-D print a prosthetic. From diagnostic tools to new surgical techniques to a more holistic approach to treating patients, the landscape of veterinary medicine looks very different today than it did in the 1990s or early 2000s.”
As the cost of pet care has risen together with people’s increasing devotion to their animals, the pet insurance industry has become an important part of the social fabric. In exchange for paying a monthly premium, pet parents (formerly known as pet owners) can rest assured that they’ll be able to afford expensive surgeries and procedures.
In 2016, Healthy Paws released a Cost of Pet Care report that Jackson said was meant “specifically to educate pet parents on the most common accidents and illnesses that send pets to the vet, and just how expensive the latest and greatest treatments can be.”
Spoiler alert: they’re pretty dang expensive.
How does pet insurance work?
While pet insurance is essentially health insurance for your pet, they are some key ways in which the policies differ.
Ashton says, “The main difference consumers should understand is that pet insurance is actually property casualty insurance, not health insurance. Because pets are legally considered property, pet insurance functions much like car insurance; when you get into an accident, you submit a claim and receive a reimbursement for the cost of the repairs.”
On the plus side, he also says that “pet health insurance benefits are more straightforward and easier to understand than human health insurance, and people are typically much more satisfied with their pet insurance than their own health insurance (we hear that at least once a week from our policyholders).”
Jackson adds another one of the ways in which pet insurance is simpler: “With pet insurance, you can see any licensed veterinarian for treatment – there’s no need to check if the doctor is “in network.””
“We have customers tell us they wish their health insurance was as easy as their pet insurance,” says Jackson. “Healthy Paws lets you simply take a picture of your vet bill to submit a claim.”
There’s only really one way in which human health insurance beats out pet insurance, and it has to do with pre-existing medical conditions.
“It is important to understand that unlike human health insurance, pet insurance cannot cover pre-existing conditions.” says Ashton “Just as you can’t go buy a car insurance policy to cover an accident you’ve already had, you can’t run out and buy pet insurance to cover a cancer diagnosis. This is why it is essential that pet parents insure their furry friends as soon as they bring them home as a puppy or kitten. Insuring your pet early on means you’re less likely to run into issues with pre-existing conditions later in life.”
Jackson points out that, “If you have an older pet, or adopted a dog or cat with an existing health issue, you can still protect them with pet insurance. The only difference is that your policy will not cover any conditions present before you enrolled (for example, diabetes), but it will cover any new illness or injury your pet experiences (like a broken leg or periodontal disease).”
It’s perfectly understandable that pet insurance doesn’t cover pre-existing conditions. It just wouldn’t work financially for the insurers. If you have an animal with a pre-existing medical issue—especially if it’s older–this is something you should factor in when deciding whether to purchase a pet insurance policy. Even with the insurance, you might end up facing huge medical bills all the same.
What should I consider when shopping for pet insurance?
When you’re shopping for anything, whether it’s a car, a personal loan, or a pet insurance policy, it’s important that you actually shop. Don’t just buy the first thing that you see. Shop around, compare prices and features. Maybe even create a spreadsheet to keep yourself organized. The more shopping around you do, the more likely you are to find a perfect match.
When it comes to shopping for pet insurance, Ashton advises that, “when comparing companies, it pays to find out whether they distinguish between curable pre-existing conditions (ear infection, UTI, conjunctivitis, etc.) and incurable pre-existing conditions (diabetes, food allergy, etc.).
He highlights the fact that his company, Petplan, “will reinstate coverage for a curable pre-existing condition after a certain period of time passes with no relapse,” whereas “many providers exclude any illness or injury your pet has had in the past for life.”
And while price is, of course, always going to be a major factor, Jackson warns that, when it comes to pet insurance, “The biggest misconception is that the cheapest policy is the best policy.”
“I know we’re always on the lookout for the best deal,” he says, “but if you’re committed to making this investment in your pet’s health, you should choose the coverage that provides the most value. And value goes beyond how much your annual premium costs.”
Ashton also some other questions for you to consider:
- How flexible is the policy?
- Can you choose a deductible and co-pay you’re comfortable with, or are you forced to buy a one-size-fits-all plan?
- How comprehensive is the standard coverage? To get coverage you really need, do you have to buy add-ons?
- Will your reimbursement be based off of the actual fees you paid at the veterinarian—including the exam fee?
- Is their customer service available 24/7 in case your pet has an emergency in the middle of the night?
- Do other pet owners seem happy with how they are treated by customer service?
- Is it easy to submit a claim, or do you have to print out a bunch of paperwork?
- Do they seem like a typical insurance company, or a team of pet people who are truly dedicated to pet health?
- Does the company give you free resources and tools to help take better care or your pet, or do they simply collect a premium?
“All of this matters” says Ashton. “In this day and age, pets are our family—and you really can’t put a price on that.” Learn more about saving money on pet care in the blog post How You Can Get Cheaper Pet Care Without Cheaping Out.
Is pet insurance right for me?
As always, the real answer here is a giant whopping “it depends.”
It depends on your budget, and on whether you can reasonably afford to put money every month towards a plan. It depends on your relationship with your dog or cat; if you know you’re the kind of pet owner that will pull out all the stops to treat them, then pet insurance is probably a good idea. It depends on the kind of plan you can get – if the monthly cost is worth the actual coverage you are guaranteed.
While the cost of a pet insurance plan is always going to vary depending on which policy you choose, what breed of pet you have, which company you work with, etc., the number that is generally cited in terms of cost is $1 a day, which comes out to about $365 a year. On top of that, most plans have a maximum yearly deductible and require that you pay at least a portion (usually 10 to 20 percent) of the cost once that deductible is met.
A 2016 article from Consumer Reports looked at plans from four major pet insurance providers and found that, in the instances they studied, Healthy Paws was the only one that paid out more than what the customers would have paid over the life of the policy. (PetPlan was not one of the companies included in the study.) In other words, in terms of pure dollars and cents, the other three plans ended up costing people more than they saved.
But that’s only one way to look at cost. Another way is to look at pet insurance the same way as looking at a personal installment loan. If your dog or cat comes down with an illness that costs thousands of dollars to treat within the span of a month, then it’s likely that covering those bills would mean a lot of financial strain.
On the other hand, spreading those costs out over several years by paying monthly premiums on a pet insurance policy means that you will be able to more easily absorb those costs. Taking out a loan to pay for costly car repairs might mean paying more overall once interest is factored in, but being able to pay that amount off in smaller increments can make the added cost totally worth it.
One thing to be wary of in terms of price are wellness plans that cover things like routine check-ups and vaccinations.
“Wellness care is pretty straightforward and routine, year after year,” says Ashton. “Pet parents know to budget for an annual checkup, vaccines, parasite preventives, dental cleanings and the like—it comes with the territory of having a pet. So wellness plans, unless they’re actually saving you money, can be a bit redundant. I’m not going to say they never make financial sense, but routine care is never unexpectedly going to cost $10,000.”
Ultimately, the decision to invest in pet insurance is entirely up to you. But if you’re the kind of person who’d be willing to go into debt – and maybe even turn to a predatory lender – to pay for your pet’s very expensive care, then pet insurance is probably the right financial call.
About the Contributors:
Rob Jackson, is the co-founder and chief pet protector of Healthy Paws Pet Insurance. Rob and Co-Founder Steve Siadek met through a local, no-kill animal shelter. As pet parents they envisioned a business that respected pets as family, as well as the development of a foundation to help homeless dogs and cats. Over his 30-year career, Rob has been an entrepreneur, insurance executive, and non-profit devotee.
Chris Ashton, is the co-founder and co-CEO of Petplan. Chris earned an MBA from The Wharton School of the University of Pennsylvania and earned a Bachelor of Arts and Master of Arts from Oxford University, and spent seven years serving as an Officer in the British Royal Marine Commandos. Since launching Petplan in 2006, Chris and his wife Natasha Ashton have been successfully involved in the business and philanthropic communities of Philadelphia. Chris has lent his expertise to several business resources, including FastCompany.com, ExpertBeacon.com and Examiner.com. He has also been quoted in USA Today, the New York Times, the Wall Street Journal, Forbes.com, Fortune magazine and FOXBusiness.com, among others.
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