Everyone loves their pet and wants to do whats best for them. You might have paid for training and special food and certainly realize that pets can be expensive. But what if you pet gets injured or has a disease? You may have considered pet insurance to cover these emergency visits or operations, but that might cost you more in the long run.
Why Pet Insurance Is Insurance You Can Do Without
Pet insurance has limited coverage. Insurers have maximum payouts on various veterinary procedures, so you may not receive as much back as you expected when you filed the claim. Like many forms of insurance, you will not be eligible to claim on expenses related to a previously existing condition your pet may have had prior to getting the coverage.
How To Create Your Own Form Of Pet Insurance
Instead of paying for pet insurance, you should look to increase your emergency fund to at least partially cover any possible expenses. Simply add the same amount to your emergency fund that you would have paid in monthly premiums. Then you will be able to withdraw this money when needed, without any deductible or concerns about whether the procedure is covered by your insurer. Even better if your pet lives a long and happy life without any major issues, you’ll then have additional savings without having lost your money to premiums.
Now you can always find people that will say that pet insurance was worthwhile because they received a big payout just months after paying $15-20 a month. And while that can happen, you need to weigh the odds of having to claim early in your pet’s life to the size of the possible expense when deciding if any insurance product us right for you. In this case, most vet bills are not a large financial hardship and savings can be put in place to cover all or at least some of the expense.
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Tom Drake is the owner and head writer of Canadian Finance Blog.
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I completely agree with you. I looked into pet insurance for my Great Dane, as well as for my horses (livestock and pet insurance inquiries), and I was astonished at just how limited the coverage was. Basically unless someone ran them over or they were hit by lightning, there would be essentially no coverage. Since then, I, too, have added my pets to my emergency budget.
An increased emergency fund is by far the best way to “insure” your pets. Get’s all the loopholes out of the way.
I would not pay for pet insurance, but still would cry a lot if my cat died… So I like your emergency fund idea. I think another thing to consider is the limit you want to spend for your pet. Vet can be very very expensive so from day 1 you have a pet, ask yourself how far you’re willing to go for those expenses.
Yes, even with an emergency fund, you may not want to completely empty it for a major operation on an older pet.
@Jessica,
Forgot to say, I think great pets such as horses do deserve a basic insurance as they can be considered more as an investment than a cat or a dog for example.
But only if the insurance can be claimed. Too many restrictions can make it almost impossible to qualify depending on what happens to the animal.
I quit my pet insurance a few months ago and could never be happier.
I would rather rely on myself than hope and pray that my insurance company would pay for it (when often they denied it).
It’s okay when you’re paying for big things, like accidents I suppose (and only paying $10 a month or something).
But with the annual deductible (which can be $250 a year) and the copay which is usually 10-20%, I don’t really think it’s worth it.
I remember you writing about that Y&T. Thanks for sharing some numbers as one of the converted
I think the same is true with dental insurance based on the same premise … by the time you pay premiums, pay into the policy through a waiting period (sometimes a year for major procedures), pay a co-pay, then pay co-insurance, is it really worth it?
I agree, stash away cash & you’ll save money.
Too bad vet bills can’t be paid for pre-tax like dental bills can.
At least dental insurance is more dependable to pay when you make a claim. But yes, you want to look at your usage compared to what your paying for the benefits, then decide if it makes sense for you.
We read the brochures for pet insurance when we got our dog and it didn’t seem to be worth it.
Good move Kay Lynn. The fact they push the insurance at pet stores and vets is a bit of a red flag of how profitable these policies are. Most truly needed insurance isn’t marketed heavily.
When we lost our dog to bone cancer in September, we submitted $1300 worth of eligible receipts and received a grand total payment of $150 in re-imbursement! In five and a half years, just a very basic policy cost us about $1600. If we had created our own fund, we would have been $300 ahead instead of $2750 behind.
Thank you! This is one of the Great Rip-Offs of the Western World. Take a look at the fine print: most of them cover nothing more than the occasional car accident. If you don’t let your dog run around off the leash, it’s unlikely to get hit.
Friend of mine had the same experience as Lesley’s: had his dogs massively insured, and when one of them developed a serious illness discovered the “insurance” covered almost nothing.
Completely (yet respectfully) disagree Tom. The reason I have pet insurance on my dog is so I never have to ask the question – is the procedure too expensive. I never want to have to make that decision.