Are You Doing Enough to Protect Your Pet?
March 17, 2014Have you ever looked at a dirty old sock and thought, “Hey, that sure looks like a delicious treat. Should I eat that?” Hopefully not! But then again, you’re not a dog.
Apparently, the newest addition to our family, Muffy VanDerBear (a.k.a. “Muffy Bear”), will eat anything and everything. There isn’t a sock, Lego Star Wars figure, stuffed animal, or research report that is safe around our house these days. Since “the dog ate my assignment” is no longer really cute or acceptable at my age, it is time for some serious puppy school training. Having experienced one emergency visit to the vet already, it is also time for us to at least consider pet insurance.
Pets do more than just create an occasional mess around the house and require us to increase the household budget to accommodate the extra expenses needed to support their well-being. Studies demonstrate they have numerous benefits to our lives through the emotional support and entertainment they provide. Some medical studies even suggest they can help lower our blood pressure. (Note: I am still waiting on the returns of that investment as Muffy VanDerGoat does not understand or respect the idea of the home office during webcasts and conference calls.) With the countless benefits pets provide us, it is important that we do our part to include them in the family financial planning process. Two ways to do that are through pet health insurance and making sure you have an adequate emergency savings fund.
How does pet insurance work?
Pet insurance helps pay for expensive treatments and can give you the peace of mind that your pet will be able to receive the best care possible should an emergency or illness occur. The reason that it should be a consideration in your financial plan is because veterinary care can be expensive, especially if you ever have to get an MRI or undergo expensive treatments such as chemotherapy. American pet families spend billions of dollars each year on veterinary care ($14.1 billion as of 2011). Pet insurance is available for many different animals, although cats and dogs are the most popular pets to provide insurance for.
In most situations, the process involves you taking your pet to a licensed veterinarian and then you pay them at the time of service. Next, you submit a claim to the pet insurance company for reimbursement. Not all conditions are covered and your pet’s age and breed have an impact on the premium costs as well as available coverage.
Should I pay for emergency pet care from savings vs. pet insurance?
This is a common question and this is also a personal issue. As is often the case in most financial matters, the best option for you depends on your financial situation and other factors. At a minimum, it is generally accepted that 3-6 months of basic living expenses is an adequate amount for an emergency safety net.
The reality is that most Americans don’t have sufficient savings and if you are trying to pay down debt your primary focus should be on applying extra income toward debt reduction. Even if debt reduction is a top priority, it is always important to have at least a “starter emergency fund” to help provide some emergency savings if something happens to you or your pet. This amount depends on your personal comfort level, but generally $1-2k is an acceptable goal to set for an initial savings fund. This should be a goal regardless of whether you have pet insurance or not. The more savings you have, the better prepared you will be for any unforeseen expenses and the more likely that self-insurance (i.e. paying out-of-pocket for veterinary care) is an option.
Insurance is still a valid option for families that are fully capable of paying out-of-pocket for pet health care expenses. This is the primary purpose of any type of insurance. You are protecting against the risk of expensive surgeries and procedures. Some pet insurance policies do more than just provide catastrophic coverage. Pet insurance policies with wellness care features can also help promote a healthy and long life for your pet with routine vaccinations, annual checkups, and more.
How does pet insurance fit your budget?
Pet-related expenses can create surprises and add potential stress to your family budget. Toys, treats, bedding, food, leashes/collars, and training aren’t cheap and if not included into a working spending plan, they can create headaches. That is why you should always track your average pet-related expenses and set limits for your monthly spending in advance. If you are considering pet insurance, you should always include the premium payments into your personal spending plan.
Pet insurance isn’t for everyone.
If you are still doubtful if pet insurance is right for you, then you’re not alone. A Consumer Reports comparison of various policies concluded that pet insurance is rarely worth the price. Perhaps the real question should be is it is worth the peace of mind? Using that as the trigger question, pet insurance sounds more appealing.
In my opinion as a financial planner and pet owner, creating an emergency savings fund should be the first place to start protecting your pet. If you don’t have at least a starter emergency fund, you should focus on that first. You also need to determine if pet insurance is cost effective or not. For example, a $25 premium over a 10-year period results in a total cost of $3,000. Some people wouldn’t blink at this expense for the care of their pet while others aren’t capable of coming up with these funds without going into additional debt.
You can learn more about pet insurance and get quotes at sites such as petinsurancereview.com and consumersadvocate.org or check with your existing insurer for other policies to see if they offer this protection. I’ve also found that it’s helpful to inquire with other pet owners and local veterinarians to get their feedback on past experiences with companies that offer pet health insurance. If you have your own experience with pet insurance, leave your thoughts in the comments section below.