Pet Insurance
Question:
I read that, “most people are better off forgoing pet insurance and instead putting the money they would have spent on premiums into a savings account. Pet coverage can cost $2,000 to $6,000 over the life of an average pet, and the chances are slim you’ll ever need to shell out that much for treatment.”
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Mike Keller
ANSWER:
Hi Mike,
Thank you for your response and the chance to hopefully clarify some of the confusion.
First off, the full plans that cover everything including flea products are not necessary and I believe that is more what the article you posted is referring to when it talks about the cost/versus lifetime use. At upwards of $150 to $200 a month for some of the high end plans, they are completely correct – no one needs that kind of coverage. The people that buy that kind of coverage are same type of person who buys flood insurance when they live on top of a mountain. They want to know they are covered under every eventuality and all the power to them if that is what they need to get a solid night’s sleep.
For the rest of us, each situation is different and must be looked at on an individual basis.
For example mixed breeds tend to be healthier then purebreds so I am less inclined to suggest to the owner of a medium-sized Heinz 57 to get pet insurance. However, if the owner of a Bulldog or Shar-pei asked me what I thought, well, I would tend to lean towards getting the dog covered – not the platinum $200 a month plan but definitely something that covers all foreseen eventualities for their specific breed.
I will point out that the mixed breed versus purebred example can backfire as well. I never bothered to get pet insurance for my pitbull x pup because she was a mixed breed and pitbulls in general tend to be extremely healthy dogs. At 13 months she developed autoimmune hemolytic anemia, charging up a bill of nearly $6000 in two weeks. It took me six months of Macaroni & Cheese to pay that bill off and yes, if I had known what the future held for my girl, I would have bought basic insurance.
The value of those emergency/basic illness plans that cost between $15 and $25 a month are priceless. What about for someone on a fixed income? Say the person does have the ability to put away the cost of the pet insurance each month and not touch it for any reason other then if their pet is in an accident or becomes sick. Emergency pet insurance covers all specified emergencies up to around $2000 usually but my concern would be what happens if the pet breaks his leg after six months? The $90 to 150 saved is not going to fix the leg whereas the insurance would cover it in full.
Like most things in life, pet insurance is not a strictly black or white decision – there are many shades of grey. For most people, emergency coverage is all they need but definitely take the time to think about the purchase, research the companies, ask your breeder and/or vet about what they feel is necessary for your dog and decide on your comfort level. Take my word for it, you never want to be standing in front of your sick or injured dog and have to decide if you can afford the emergency treatment it requires to survive, those decisions are better if based on what is best for the dog, not your pocketbook.
Take care,
Ann
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Interesting discussion – but on a more fundamental level, just remember what insurance is really all all about: a facility of collective risk mitigation provided by the insurance company. On a purely statistical basis, you’re pretty much ALWAYS better off putting your premiums into a savings account rather than into an insurance policy – if this were not the case, the insurance company would be in a negative cash flow position and would quickly go broke. The catch is that these statistics only work on a collective basis when averaged over a large number of policies. On an individual basis, most policies are money losers (from the standpoint on the policyholder), but if you’re one of the relatively few who need to make a major claim, you’ll be happy you paid your premiums!
Just like Ann said, it’s not a black and white decision. I agree that the super-deluxe plans are probably not worth the extra expense. If I was loaded and money was a complete non-issue for me, I wouldn’t bother with insurance at all. As it is, both of my mixed-breeds are insured at the $5,000/accident and $5,000/illness/year level, which costs me about $60/month/dog. I figure the claim on one truly major accident or illness could pay for the majority of the lifetime premiums on each dog. With luck, these policies will turn out to be a complete waste of money for me, but insurance is about risk mitigation and management, not saving money.
It’s also worth noting that minor claims can recover at least some of the premiums – a recent claim for a fine needle aspirate on a mysterious lump covered about three months worth. The sample was unremarkable, and Harley is fine, but I was glad to have the insurance there while I waited for the lab results!
There are other methods than insurance to pay for emergencies, if you are in a financial position to try these: first try to plan ahead by having at least some money set aside and earmarked for pet emergencies and not for impulse purchases (even when that new dog-friendly auto looks so enticing); research financial aid options before it becomes an immediate and dire necessity to do so; try to have a credit card that you keep exclusively for emergency use (obviously this won’t work if the economy has gotten to you, too). Do take a look at how Care Credit works. In my opinion pet insurance is not a good idea and here are my reasons: first it will not help you in an emergency because all it does is reimburse you for what you have to pay out of pocket. No emergency vet clinic is going to “bill the company” for you. You WILL have to pay the vet clinic whatever thousands of dollars they are going to gouge you for while holding your pet’s life in the balance or you will have to make the terrible choice no one should ever have to make. I should also point out this doesn’t just happen with our pets as a recent very disturbing public research statistic has appeared in the media that almost 50,000 people (including children) die every year because they can’t afford medical care. I would also suggest going to any of the emergency clinics in your area not just those recommended by your own vet and having a face-to-face meeting with them and obtaining written “rules” they have for dealing with payments in emergencies – at the very least they will remember you cared enough about your pets to lay the groundwork beforehand! Second, understand that insurance companies don’t just pay claims they “adjust” them first and this can be a relentless process pitting the “adjuster” against the policyholder and would you perhaps like to take a guess as to who wins these battles??? Hint: it’s NOT the policyholder! Third, the caps and co-pays just like in human insurance (health or otherwise) are deeply buried in legalese and fine print and it is a rare non-lawyer (even insurance specialist lawyer) who can understand what the insurance companies’ highly paid legal team crafts for their policies to keep premium dollars right where the insurance company wants them – in their own bank accounts, NOT the policyholder’s or the pet guardian’s veterinarian’s bank accounts. In such cases “there’s no such thing as a good surprise.” What you think you’ve paid for is usually NOT what you are going to get!
Keep in mind this is a largely unregulated industry. While some people who worship the concept of “free markets” seem to have the idea that “competition” will create a good (honest) affordable product the sad reality is that there may be hundreds of pet insurance products and thousands of human insurance products and NOT A ONE OF THEM is honest or reasonably priced.
I have worked in a small but key segment of the insurance field for nearly four decades, I’m ashamed to admit, because I don’t have any other way of making a living. I am shocked and disgusted on a daily basis at what I see of the insurance industry and its incredibly sleazy immoral dishonest business practices. The simple rule is this: follow the money and you will begin to understand what insurance is really about – and that goes for human insurance (health, auto, homeowners) as well as pet health insurance.
These are just my opinions obviously but they are educated opinions. Of COURSE insurance industry representatives are going to defend their practices and claim high moral ground. Educate yourself in what really goes on, then decide for yourself but “don’t drink the kool aid.”