The Growing Importance of Pet Insurance
For many people, pets are more than just animals; they’re cherished members of the family. Americans spend an estimated $147 billion annually on their furry companions, a figure that has nearly doubled over the past decade. This significant investment underscores the importance of managing veterinary costs effectively. One way pet owners can do this is through pet insurance.
Pet insurance policies offer a means for pet owners to manage these expenses by providing coverage similar to health insurance. Over the years, the number of insurance companies offering medical and wellness coverage for pets has grown, making it easier for pet owners to find suitable plans. These policies come in various types and rates, allowing owners to choose what best fits their needs.
“Pets are like our family,” says Brian Jorgensen, CEO of MetLife Pet Insurance. “Owners want to keep them healthy and happy, but regardless of age or breed, they can experience accidents or diseases. When some of the really expensive things happen, it can be a bit of a nightmare.”
Some pet owners maintain enough in emergency savings to self-insure the cost of veterinary care. However, if you’d rather avoid a hefty bill in the event of a major health issue, pet insurance may be worth considering.
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What Does Pet Insurance Cover?
Pet insurance primarily covers dogs and cats, although there are specialized plans for reptiles, birds, small mammals, and other exotic pets. There are three main types of coverage:
- Accident-only: Covers unexpected injuries.
- Accident and illness: Provides broader coverage, including conditions like cancer and ingestion of foreign objects.
- Wellness: Includes routine care such as vaccines, annual checkups, dental care, nail trimmings, and flea, tick, and heartworm medications.
Pet owners can purchase accident, illness, and wellness coverage individually or bundled together. Most policies don’t cover preexisting conditions, although some will include them if the condition is curable.
When shopping for pet insurance, consider your pet’s age, potential illnesses common with its breed, and any preexisting conditions. If you’re unsure about common diseases, consult your veterinarian before selecting a provider.
The Cost of Pet Insurance
Pet insurance is typically billed monthly and can usually be canceled anytime. According to the North American Pet Health Insurance Association, the average monthly premium for accident and illness coverage is $56.30 for dogs and $31.94 for cats. However, some plans are available for as little as $16 a month for dogs and $10 a month for cats.
When determining the price of premiums, insurers look at five factors: breed, age, deductible, co-insurance, and plan limitations. The more comprehensive the plan, the higher the cost. Similar to standard health insurance, you can lower premiums by increasing your deductible.
Pet insurance can be purchased from specialty providers, major insurance companies like Liberty Mutual, MetLife, and Nationwide, or through retailers such as Petco and PetSmart. In most cases, you pay upfront and get reimbursed by the insurer, allowing you to visit your preferred vet rather than being limited to a network of providers. The speed of reimbursement varies by provider.
Janet Ruiz, a spokeswoman for the Insurance Information Institute, recommends obtaining at least three quotes when shopping for pet insurance. Pay attention to what the plan doesn’t cover and any limitations on the type of care your pet will receive. You can compare quotes at Pawlicy Advisors and Pet Insurance Review.
Pet Insurance vs. a Pet Savings Account
Many pet owners wonder whether the money spent on pet insurance premiums might be better used to build up a pet savings account. A dedicated savings account for pet costs can provide a cushion for emergencies without disrupting your budget. It also allows you to use your own money without worrying about filing claims, waiting for reimbursements, or facing claim denials. If you opt for a high-yield savings account, it can even earn interest while you save.
With pet insurance premiums averaging up to $56 per month, setting aside that amount into a savings account could result in over $670 saved in the first year. However, a single emergency can easily wipe out that balance—especially if it requires ongoing care like arthritis or diabetes, which can cost far more than $56 per month.
Ultimately, the best option is to do both: get pet insurance and budget to put some money aside each month into a dedicated pet savings account. Once you have a few thousand dollars saved, you can reevaluate whether you want to keep your insurance. However, it’s generally advisable to keep it for the life of your pet.
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