As financial coaches, we have seen our fair share of canine and feline-loving clients. We know pets are important, so we always account for them when crafting any budget. But beyond budgeting for the basics like food and routine vet appointments, people ask us if they should purchase pet insurance for those unexpected pet-related accidents and emergencies. 

Our sweet Nikki, with her puppy sister, Storm.

And it’s no wonder emergency pet expenses are on our clients’ minds. According to consumer reports, cancer treatments for pets can easily run $5,000 and surgery on a torn ACL can cost around $3,300. And we get that those are some very difficult financial decisions to make. 

We got our dog Nikki when she was just four months old. She was so incredibly cute and sweet and, like all puppies, a little mischievous. We were lucky enough to have her until she was 15 years old. Thankfully, we never had to make a $5,000 decision to try and save or improve her quality of life. And that’s totally what pet insurance can and should provide – the assurance that you can make the best decision for your pet regardless of cost. 

You Don’t Always Get What You Pay for With Pet Insurance

Our response to most of these “Should I…?’ questions from our clients is typically “It depends.” Pet insurance is an exception. When it comes to purchasing pet insurance, we usually say no. Don’t do it.

Insurance helps provide peace of mind that should the unexpected happen, you are covered. As most people know though, just because you have insurance that does not mean you’ll be reimbursed for all your expenses with ease. 

It’s worth noting that most pet insurance companies, don’t operate like your health insurance provider in one very important way. You likely will have to cover all costs upfront and then submit for reimbursement from your insurer. Some pet owners are less than pleased to pay for a service only to find out it is not covered by their pet’s insurance plan once their claim is rejected. 

Start a Pet Savings Account Instead

We believe the better option is a savings account. If you took the monthly premium you pay for pet insurance and instead put it in a savings account specifically earmarked for pet emergencies, you’ll likely have enough money in that account to cover the bulk of any accidents or injuries. Also, that amount will likely be more than the amount pet insurance will save you. 

But let’s run the numbers. According to a 2018 Washington Post article about pet insurance, a mixed-breed dog insured by Pets Best pet insurance is enrolled as a puppy at $35 per month. However, by age 8, that same dog’s premium more than doubles to $83. Four years down the road, the plan is now $149 per month or a whopping $1,788 per year. If we had paid those same amounts for Nikki throughout her life, we would have spent more than $12,000  on pet insurance. 

Now, let’s take that same premium amount that the dog started at and say you put that amount in a savings account every month instead. By the time the dog turns 8 years old, you would have $3,360 in a savings account. Take that $35 and extend it to the dog turning 15-years-old, like Nikki was, and you would contribute more than $6,000 to a savings account.  

That’s money in your pocket instead of money tied up in an insurance company. If you had just paid the premiums on your pet’s insurance until it turned 12, you would have paid $7,344 to Pets Best. And you’re not guaranteed to be able to use it all when you need it. It’s subject to the provisions of your insurance provider’s policies. Not to mention, some policies have deductibles, copays or co-insurance when they do cover an expense. Those out-of-pocket amounts are in addition to that $7,344 figure.

Not All Pet Insurance Plans Are Created Equal

We know people want peace of mind, so if insurance provides you that, then, by all means, buy it.  But if you want to purchase insurance, we suggest you do some due diligence before signing up for a plan. Not all pet insurance policies are created equal. 

Here are a few things you should research before purchasing a plan:

  • Coverage – Plans can cover accidents, illnesses, or accidents and illnesses. Most plans do not reimburse for routine check-ups, so you’ll ideally want to purchase a plan that covers both accidents and illnesses. 
  • In- versus Out-of-Network – Just like your health insurance, you want to make sure your preferred vet, and possibly even the closest emergency vet, is an approved provider to ensure you can use your insurance where you’re most likely to schedule an appointment.
  • Co-pays and Deductibles – Are there copays? Do you have to meet a deductible before insurance kicks in? If so, know what the amounts are for each.
  • Pre-existing conditions – This is especially important to check if your pet is older. Does the insurance cover pre-existing conditions? If so, what are those conditions? 

Having a sick or injured pet can throw your life into disarray. So if you’re purchasing pet insurance to provide you relief and peace of mind in this situation, make sure your plan is actually going to provide that. And for even greater peace of mind, create a separate savings account for your pet. They’re worth it. 

We lost Nikki just last year and not a day goes by that we don’t miss her. She was the best dog. You probably say the same thing about your pet. And you’re right.