Should You Buy Health Insurance for Your Pet?
High deductibles, excluded breeds and conditions — consider these before you shell out money
When a beloved pet is seriously ill, it’s only natural to want to do whatever it takes to restore it to health. But medical treatment for a furry family member can be extremely expensive. Even a pet’s mild illness can put a serious dent in your bank account.
It's no wonder more and more animal lovers are buying health insurance for their pets. According to the North American Pet Health Insurance Association (NAPHIA), 1.4 million Americans bought pet insurance in 2014, about 10 percent more than the year before.
But is pet health insurance really worth it?
When Consumer Reports analyzed nine different pet insurance policies, using the total medical costs incurred by a real 10-year-old beagle for comparison, it found that none of the policies would have paid out more than the total amount spent on the insurance premiums. On the other hand, the beagle was relatively healthy and had had few reasons to need medical care. When a hypothetical serious medical condition such as arthritis or removal of a benign tumor was added to the analysis, some of the policies would have paid off.
Doing the math
The average monthly premium for pet health insurance is about $36, according to NAPHIA. Let’s say you have a cocker spaniel, a breed that lives for about 11 years on average. If you buy health insurance for him every year from the time he’s a puppy throughout his lifespan, you’ll spend a little over $4700 on premiums. You could lower the total payout by purchasing only accident protection, which costs about $12 per month on average. But either way, as long as your dog doesn’t develop a chronic condition or a serious illness or injury, you’re unlikely to come out ahead.
On the other hand, if your pup were to tear his ACL (anterior cruciate ligament), a common canine injury, it would cost around $2000 to treat it. If he passed out one day, an MRI to rule out a brain tumor could set you back about $1750. In such cases, pet health insurance could be a financial life saver. The problem is, pet injuries and illnesses are almost impossible to predict.
How to comparison shop
If you want to insure your pet, know that no policy will pay a vet in full, and you’ll likely have to meet a deductible before you’re reimbursed for any expenses. Most policies don't cover pre-existing conditions. And if an insured pet becomes ill, the insurer may exclude coverage of the ailment when you renew your annual policy.
Before buying pet insurance, do some comparison shopping. The American Veterinary Medicine Foundation (AVMF) recommends asking your vet if your pet is likely to need special medical treatment down the road. Then get details of three or four different policies from the Internet and consider these five important questions in order to home in on one that makes sense for you:
What’s the deductible? Know how much you’ll have to pay out before insurance kicks in. Usually the higher the deductible, the lower the premium. A policy with a high deductible is an option if you want coverage primarily for a catastrophic event.
What’s the co-pay? Even after you’ve met the deductible, you’ll be responsible for a percentage of the vet's bill. Typically you pay the entire bill and are later reimbursed for a percentage of the total. Avoid insurance in which reimbursement is based on what the company considers a "reasonable" or "customary" cost for a service provided.
Are there any caps on coverage? If there's a limit, is it per incident? Per year? A $2000 limit "per incident" won't go very far if your cat is hit by a car and needs surgery and hospitalization or your new pup needs diagnostic testing. Another thing to look out for: a limit on charges to treat specific conditions.
Is there a list of excluded conditions? Of course you can't predict what illness will affect your dog or cat, but some breeds are prone to certain health problems. Does the policy cover congenital or inherited conditions? Don’t buy into a policy that has a long list of excluded conditions.
Does the policy cover medications? Medication for an animal can be as expensive as drugs for humans. This is especially true if a pet has a chronic condition that requires indefinite treatment. And if your pet needs to be on a special diet? Even policies that offer some drug coverage are unlikely to reimburse the cost of prescription food.
Can you choose your own vet? According to the AVMF, pet insurance programs should allow pet owners to choose their own general veterinarian as well as specialists and emergency/critical care facilities.
If your research doesn’t turn up a policy that meets your budget, or you simply don’t want to deal with the red tape and potential financial loss of buying health insurance for your pet, consider creating a “sick pet” fund, and make monthly deposits for emergencies.
Related: When To Take a Sick Pet to the Vet