I spent some time today reading articles on the Embrace Pet Insurance blog. I am going to focus on the options available in the states, and compare only those, but if anyone wants what seems to be a comprehensive list of pet insurance in other countries, check out that blog for more info.In reading the blog, one of the good arguments for getting insurance sounded like something my dad would say – insurance isn’t about guaranteeing that you save money year to year, but about making sure you are covered for the unexpected large expenses. And that really is the point. I can afford the checkups, no problem. It is the “what if” that worries me. What if something big and unexpected happens and I’m facing a sudden bill of multiple thousands? What if that was just a diagnosis, and the treatments will be twice as much? Going into debt is one thing, but do we need to resign ourselves to that possibility?
I highly recommend that everyone start with reading this extensive series of articles explaining pet insurance. Embrace does a good job of explaining the terms and the options, and then explains why they offer what they do. And that is the last I will refer back to their blog while I try to look at the options. If anyone is wondering why I have referred only to their blog so far, it is because I have found no other site that has collected so much information all in one place. Considering they are trying to sell their own insurance, they have done a remarkable job of being fair and objective when explaining pet insurance (not just their own) and the options out there for us.
When looking at pet insurance, from a money standpoint, there are several things to consider. The deductible, the monthly premiums (which sometimes can be paid annually, and often with a discount when paid annually), the co-pay, and the annual limit. The coverage you get for this will depend on the insurance itself. I’ll start with a basic look at the money separate from the rest.
The deductible is going to be your out-of-pocket expense, no matter how much else the insurance does or does not cover. This is just like car insurance, really. If you are in an accident, you pay your deductible, and the insurance covers the rest, perhaps with an annual limit. That is the same for pet insurance, in general. Some do cover routine exams and shots, in which case the deductible doesn’t come into play. The lower the deductible, the higher the monthly premiums are going to be. Again, just like car insurance. The annual limit depends on the plan – generally ranging from $5,000 to $14,000. Sometimes there is a separate “per incident” limit, and sometimes there is a cancer treatment limit. The co-pay is, for pet insurance, generally calculated based on a percentage of the total bill. There is a range, again depending on the insurance chosen, and again, the lower the co-pay (as in, the higher percentage of the bill, minus the deductible, the insurance company pays for) the higher the monthly premiums.
There are other issues that could come into play – pre-existing conditions, genetic conditions (pure-bred cats and dogs are more expensive to cover because they are more prone to diseases), age, and whether a developing chronic condition is covered.
But at first glance, looking at the basics, how do you choose?
This depends primarily on your own financial situation. The deductibles range from $50 to $500. Strategically, you should opt for the highest deductible you could afford. If you live paycheck to paycheck and can’t count on having $500 in the bank at any given time, you will most likely be better off paying a higher monthly premium to get the lower deductibles. Otherwise, given that you are covering a potential but hopefully unlikely event, you are going to be better off with a lower monthly payment and higher deductible.
The co-pay requires the same type of determination – how much money can you count on having in your bank account?
I did a quick quote from one insurance company, just to give people an idea. My cat is 8 years old (which ups the monthly premiums), has never had serious health issues, has not tested positive for FIV or FLV, does not have other diseases, and she’s not a purebred. Quotes are based partially on zip codes, and I don’t live in an inexpensive part of the country. I got a quote for a $10,000 annual coverage, with a 35% co-pay, and $500 deductible. Let’s max that out. If something happened to her that cost, in one year, $14,000, I’d be paying $4,000 and the insurance company would pay $10,000. The cost for that coverage is just barely over $200 for the year, so my total cost would be $4,200. If I’d had her covered from the time she was a kitten, that would have cost me only $1,600 in monthly premiums. I’d have to save $1,250 per year, or a bit over $100 per month, to make sure I had that same coverage.
That’s an extreme case, of course. With the same coverage, what if I had a vet bill of $1500? Pretty common treatment expense if your cat or dog breaks a leg. I’d pay $500 of the deductible plus 35% of the remainder, so I would be paying $850, and the insurance company would pay $650. Again, for premiums costing me $200 per year. And with this particular insurance, unlike car insurance, having an accident does not mean an increase in rates.
My math might not be perfect for these rough calculations, but overall it gives you an idea. For comparison, if I wanted to pay a higher premium so that I’d have less out of pocket expenses, I would pay $48/month for a 10% co-pay, $100 annual deductible, and $5,000 yearly max. For that same $1,500 bill, I would have $100 for the deductible, plus $140 of the remaining bill to pay out of pocket for the copay, a total of $240, while the insurance company would pay $1,360. The yearly cost of that insurance is just under $600. You still come out ahead. But what about the $14,000 bill? You would be liable for $9,000, no question, plus the $600 yearly insurance amount. Yet even if you had been paying the $600 every year for the full 8 years, you would still be coming out just ahead, having paid out $4,800 total in insurance, and getting $5,000 paid by insurance.
How to deal with the difference you might owe? There is Care Credit, which allows you to finance the bill, with no upfront or annual fees or prepayment penalties, and several financing options. There is also Pet Assure, which for low fees (around $100 per year for dogs, and $60 per year for cats) will give you discounts off all vet bills, as well as food, toys, litter, things like that. One difference is that all vet offices are covered by pet insurance because it is a pay first, then file a claim, and then get reimbursed. Pet Assure is not accepted by all vet offices, but then again there is no need to file a claim.
Without having done a comprehensive comparison (yet) of what the different companies offer, it does look like they generally offer a discount for more than one animal. Also, though the insurance I got a quote on does not include routine office visits, many of them do, and the one I saw, it would be $99/year.
From a simple money standpoint, insurance does seem to make sense, perhaps combined with something like Pet Assure. Of course that does not yet take into account whether our specific animals are covered. Depending on age, pre-existing conditions, etc., our options might be limited. Plus, there is the question of which companies have people been satisfied with? On paper is one thing, but are the claims being paid?
And what if you have a bird, not a cat or a dog? Not all insurance companies will cover you, but I saw one that did cover dogs, cats, bird, reptiles, and “other”.
I will compare the specific companies more in depth another night. If anyone has insurance or has been researching it as well, I’d love to hear issues I’ve missed or additional things you’ve discovered. Experience, rumor, advice.