Pet Insurance: Basic Facts You Need to Know

Although the rate at which people buy pet insurance is still very low compared to other types of insurance, the industry has actually started to grow. This may not be unconnected to the growing costs of the veterinary care across the country. When I was about writing this article, I actually came across some statistics which I will like to share with you. With the statistics, you may likely conclude the same way I did that pet insurance industry will continue to grow for some years to come.

I understood from the 2016 Pet Insurance Statistics that one out of three pets will need urgent vet care every year. The one that baffled me most is the fact that the amount spent on pets in 2015 was $60.59 billion. This is actually a huge amount.  When I was still ruminating about this figure, my doubt was cleared when I learnt further that there were 94.2 million cats and 89.7 million dogs owned in the United States as reported by American Pet Products Association’s 2017-2018 National Pet Owners Survey. The report validated the initial statistics of $60.59 billion as amount spent on pets in 2015 but with just a small difference. They reported $60.30 billion for 2015 with the estimated figure of $69.40 billion in 2017. However, this amount includes costs of food, supplies and over-the-counter medicine, veterinarian care, live animal purchases and grooming and boarding. With this staggering amount, I think the topic on pet insurance can be considered relevant to personal finance. Even if you are not a pet owner or you are considering getting one, the information you will read from this article can be of help to you. For the pet owners, you will be able to decide whether you need to buy pet health insurance or to continue shouldering the health care costs of your pets.

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How does pet insurance work?

Pet health insurance is almost like the other types of insurance you are used to. The only main difference is that you are allowed to choose your on veterinarian. You will need to pay your vet bills while your pet insurance company reimburses your vet bills up to allowed limits. Besides, there are other things you need to know about pet insurance. Some of these are discussed below.

Features of pet health insurance

For every insurance policy, you will need to pay premium. Pet health insurance is not an exception. You many choose to pay your pet insurance premium monthly, quarterly or semi-annually or annually. The option you choose will depend on the one that is convenient for you. Some insurance companies give annual pay discount to their customers. Therefore, if you want to enjoy the discount, you may opt to pay your premium annually. Please note that you will pay the premium in advance and not in arrears. In most cases, pet insurance companies will only reimburse you between 80-90% of your vet bills. This means that you will be the one to pay the remaining balance. You can actually enjoy discount on your pet health insurance premium if you combine your pet insurance (for people having more than one pet) in one insurance company. Other insurance discount you can enjoy include spay and neuter insurance discounts.

Factors Determining Pet Insurance Costs

You need to understand that the pet insurance premium you pay from what the other pet owner pays. There are certain factors that affect or determine how much premium you will have to pay. These factors are discussed below.

  • Type of pet insurance: In auto insurance, there are third party insurance and comprehensive insurance. The type of auto insurance you choose will determine what the policy will cover. The more coverage a policy has, the higher the insurance premium will be. This is applicable to pet insurance. There are mainly four types of pet insurance namely Accident Only, Time Limited, Maximum Benefit and Lifetime Policy. These types of pet insurance come with varying premium. Choosing the right insurance policy may go a long way in helping you reduce the premium you will be asked to pay.
  • Type of pet: You don’t pay the same premium for dog insurance and cat insurance . The premium you pay on cat is most likely to be cheaper than what you will pay for your dog insurance. This is because cats are less susceptible to accidents and illnesses. Cancers and hip dyspepsia are common with dogs and these diseases or sicknesses can cost thousands of dollars to treat. That is one of the reasons dogs premium are more expensive.
  • Age of the pet: Insurance companies will not insure a new puppy. But as soon as your pet attains insurable age, it is good to buy your pet insurance. Discuss with insurance companies to find out the minimum age at which they may like to insure your pet. Please, note that insurance companies will not insure any pre-existing conditions of your pet. That is why it is important to buy your pet health insurance as quick as possible. In fact, some pet insurance companies will not insure dogs that are over eight years. If you find any pet insurance company that will insure the pet that is above eight years old, the premium you will have to pay may be incredibly expensive.  It is believed that the older a pet; the more it is prone to pre-existing conditions. On the other hand, young healthy dogs may likely be vulnerable to sustaining injury by the reason of running around. They can also be exposed to diseases or sickness through eating something disgusting from the ground.
  • Breed: Dogs and cats have different breeds and each breed has its own unique peculiarity such as special health related issues and any abnormality that can threaten their well-being. Having the understanding of the health risks attached to the breed of your cat or dog will help you choose suitable pet health insurance. There are some pets that require expensive medical care. A good example is the German Shepherd. If it injures its hip, the medical procedure involved in treating it could be very expensive.
  • Extras: Apart from the standard types of the pet health insurance available, you may want to enjoy additional coverage. Any extra you add to your policy will increase the premium you will be asked to pay.
  • Deductibles: How much you are willing to part with as your contribution towards paying your vet bills will have effect on the pet insurance premium you will be asked to pay. The higher your deductibles, the lower the premium you will be charged. How does deductible work for pet insurance? I mentioned that your pet insurance company may not reimburse you 100% of your vet bills. Some will be willing to pay just 80% of the vet bill. If this is the case, that means you will need to pay 20% of the bill. You should not mistake this 20% for the deductible.  A deductible in the case of pet insurance is the portion of the veterinary bill that you will be responsible to pay before the 80% coverage by the insurance company starts. Your deductible amount usually covers a period of one year. Thought this depends on the type of pet insurance you buy. You can choose to pay your deductible all at once or have it spread at over time. It all depends on your pet’s medical condition and your chosen deductible amount. This may seem to be complicated. Let me explain this with an example. Let’s assume that your vet bill is $500 and your pet health insurance policy is 80% coverage. If you have $100 as deductible, you can decide to utilize the whole $100 at once or you spread it. But to make things easy, I will assume that you apply the whole $100 deductible at once. In this regards, you will need to first pay $100 before the insurance company pays the 80% of the remaining balance. $500 minus $100 equals $400. The pet insurance company will then pay 80% of $400, which is $320 while you pay 20% of $400 amounted to $80. In total, you will end up paying $180 ($100 deductible amount plus $80). This is in addition to the premium you have paid.  Whatever the option you choose, your policy will not begin payment for eligible medical expenses until you have paid your deductible. You may need to find out how your insurance company treats your deductible. You may want to know if it operates annual deductibles, annual per condition deductibles or lifetime per condition deductibles.

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Does Pet Insurance Worth it?

The question you may want to ask is that, does pet insurance worth it at the end of the day? Well, it depends on the angle at which you are looking at it. If it is just in the angle of costs, you may want to compare the costs you incur under pet insurance policy with what you pay to maintain your pet without any insurance policy. Some people have the opinion that they can set aside an equivalent amount that they would have paid as insurance premium and put it in a saving account. They can then utilize the amount to take care of their pet when the needs arise. The only problem with this option is that you don’t know exactly when your cat or dog will require an urgent attention. If it happens in the first month, it means that you would not have saved enough money to pay the vet bill. This can put too much pressure on your finance or the life of your pet may be at a risk. I want to believe that you know what is best for your pet. If you see your pet as part of your family, you will do whatever you can to protect its life. With the rising cost of veterinary bills, especially if you have a breed of dog or cat that may likely cost you a lot in medical care, you may want to give pet health insurance a consideration.

Types of Pet insurance

You need to familiarise yourself with different types of pet insurance that are available. Instead of avoiding insuring your pet completely, you may find out the option that is good for you. You may realise that the right option that meets your need is not that expensive. Below are the four types of pet insurance:

  1. Accident Only: This only covers accidents to the maximum of the stated financial limit. This means that you will be responsible for vet bills arising from illnesses or any amount that is above the insurance time limits or financial limits.
  2. Time Limited: This is per condition with time limit policy. You can also call this 12 month or annual policy: This policy reimburses the vet fees for accidents and illnesses of the insured pet for a twelve month period starting from the date the accident or illness occurs up to stated financial limits per condition. This means that the pet insurance company will not pay any vet fees you incur after you have reached the twelve months limits or financial limits. Any further treatments or medication after the twelve months have expired will be paid by you. Furthermore, if the same condition should reoccur in the future, you will be responsible for the vet fees. The condition will be deemed to be pre-existing by your existing insurer or any subsequent insurer.
  3. Maximum Benefit: This is similar to time limited policy but it is per condition no time limit policy. This means that there is no time limit to the vet fees you will be reimbursed as long as it remains within the stated maximum per condition. Just like time limited policy, you will be responsible for the vet fees if the same condition should reoccur in the future. The condition will be deemed to be pre-existing by your existing insurer or any subsequent insurer.
  4. Lifetime Policy: This is the most comprehensive pet insurance coverage you can buy. You will be reimbursed vet fees on the insured pet, up to the stated maximum benefit or per condition per year. The policy covers accident, injury and illness for the rest of the life of the insured pet provided you pay your premium. If the conditions you have claimed for before reoccur, you don’t necessarily need to be responsible for the vet fees as the conditions are re-insurable. But you will be responsible for any vet fees that is above the annual benefit limit or annual condition limit.

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Pet health insurance covers the following:

  • Medical emergencies
  • Unexpected diseases
  • Accidental Injury
  • Recovery of lost pets: Your pet insurer can assist you with posters, advertising and can even offer rewards to who helps you find the lost pets. Insurance company can also help in acquiring a new pet.

Pet health insurance doesn’t cover the following:

  • Pre-existing health condition: Insurance companies will not cover conditions that already exist before you insure the pet. Besides, you should understand that pet insurance companies have waiting period. This is the period you may need to wait after enrolment before your insurance benefits start to count. If your pet sustains injury or develops illness within the waiting period, it may be considered pre-existing condition. This means that the pet insurance will not cover it.
  • Preventing or routine care such as grooming, vaccinations, flea or worm treatments, spaying or neutering and pregnancy.
  • Behavioural therapies.
  • Special diets, vitamins and supplements.
  • Examination fee.
  • Taxes
  • Fees exceeding the approved limits.

You may need to ask your pet insurance company what they actually cover and what they don’t cover. This will help you determine the policy that is right for you.

Advantages of Pet Insurance

  • Peace of mind: The fact that you know that you will be able to cover your vet fees if anything should happen to your pet gives you peace of mind. Your pet is more or less your family member. So, whatever affects your pet affects you. You cannot be happy seeing your pet in a condition that requires medical attention while you are not able to offer the required help.
  • It helps in budgeting: Whether you pay your dog insurance premium monthly, quarterly or semi-annually or annually, you already know the amount to expect. You can plan your expenses more accurately without much deviation from what you are prepared for.
  • It helps keep pets in good health: A healthy pet gives the owner joy and happiness. A sick pet can also infect the other members of the family.
  • You can select your own veterinarian: This is one of the attractions about pet insurance. You are free to choose your veterinarian. If you travel with your dog and the dog requires medical attention, you can be sure that your vet fees will be reimbursed regardless of where the bill comes from as long as you visit a registered veterinarian.
  • You don’t deplete your emergency fund: We all know the importance of having an emergency fund. It helps you meet some emergency expenses such as unplanned trips, medical bills or burial expenses. Even, if you need to temporarily take money from your emergency fund to pay for your vet fees, you have the assurance that you will soon get the money back from your pet insurance company. But it is important that you pay the money back to the emergency fund immediately you are reimbursed.

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Disadvantages of Pet Insurance

Pet insurance is not without its disadvantages. Reading through the disadvantages will help you to weigh your decision whether you actually need it.

  • It is expensive: If you consider the premium you need to pay and then add it to your deductibles and the portion of the vet fees you will need to pay, pet insurance can actually be expensive. Unfortunately, you need to keep paying the insurance premium whether you file a claim or not.
  • It may not be available for old pets: Most insurance companies will not insure pets that are older than 8 years. The ones that will be ready to insure pets that are older than 8 years may likely ask for higher premium.
  • It doesn’t cover routine care: You realise that pets that their owners take to veterinarian for routine care rarely develop illness. So, if your pet insurer does not cover routine care, it is like you are just donating money to them in form of premium as you may not need to file any claim.
  • Insurance company don’t pay immediately: You still need some cash to pay your veterinarian before you get reimbursement from your insurer.

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