There's no doubt that, after our spouses, children and grandchildren, we love our pets 'next best.' (Or maybe the order is different.) In any case, of the $46 billion Americans will spend on their pets this year, about 27 percent of it will be spent on veterinary bills. While those numbers look large and impersonal, they get real personal when it's your 'fur-baby' you are taking to the vet.
Whether a companion animal has been aging gently alongside us for years or we are just thinking of adopting one, the benefits of pet insurance are obvious. We need to consider the total cost of owning and caring for a pet, and veterinary bills are part of that calculation. However, less than one percent of cat and dog owners have pet insurance. Should we?
Uncertainty is something that is less and less welcome as we transition from 'income-generating' to living on investments, social security and other income sources we put in place as we planned for retirement. Even those of us who never purchased pet insurance before might want to explore it as a way of removing some of the uncertainty from our pet care costs.
While similar to many other forms of insurance with premiums, deductibles, caps and exclusions, pet insurance typically works the opposite of human health insurance. In fact, pet insurance is not regulated as health insurance, but rather as property and casualty insurance.
Instead of showing a Medicare or other health care card and having the doctor invoice the insurer, pet insurers expect you to pay the veterinarian bills upfront. After the fact, you submit completed claim forms to the insurer with itemized receipts and whatever other documentation is required.
The insurer subtracts your agreed deductible from the amount allowed under your policy for the specific procedure performed, considering any exclusions or other limitations. A few weeks after you submit the claim, you will receive a reimbursement check. (Only a very few insurers pick up the tab up front and charge your credit card just for agreed co-payments and deductibles.)
Pets are good for our health. One study says that, in the case of seniors, just 15 minutes of bonding with an animal triggers activity in our brains that lowers cortisol and increases serotonin. What does that mean? Our heart rate, blood pressure and stress levels drop. Long term, having a beloved pet can lower cholesterol, fight depression and even protect us against strokes and heart disease. And it can make us feel loved unconditionally.
However, losing a pet can have a devastating impact on us because of the loss of companionship, of our reason to get out and exercise, and of all the social interactions that come with pet ownership. The potential cost of vet bills, especially if our pet is moving into those costly later years, can make a difficult time even worse. Having pet insurance can soften the blow.
When finances dictate what we can do for our pets, and the result is less-than-ideal treatment or even premature euthanasia, a whole other set of emotions come into play. For those pet owners for whom pet insurance makes better care affordable, the focus can remain where it belongs: on our pet and not on our wallets
Buying pet insurance raises many of the same concerns as when we buy other types of insurance: the premiums, the ease of enrollment, what is covered, waiting periods and the quality of customer support. In short, how expensive it is, how effective and how friendly.
Also, we want to know about deductibles, percentage or dollar limits to coverage, warranties, age limits, eligibility and discounts. As with other insurance policies, the devil is often in the details.
Pet insurance is as complex as any other insurance. First off, it will not cover all of your veterinary bills. If it covers 80 percent of the bill, and it comes with an affordable premium, you will probably have found a good cost/benefit balance.
Most people buy pet insurance policies to help cover an unexpected injury or illness, and not necessarily for routine care, which is more predictable and easier to budget. However, some people do take out policies that cover preventive care like spaying or neutering, and regular wellness exams.
Most insurers exclude pre-existing conditions (which argues for buying coverage when your pet is young and healthy). Waiting periods until policies take effect can run from days to a few weeks, so policies cannot be purchased once you are already facing an illness or accident.
On eligibility, some policies come with breed restrictions. Others have age limits. Even when they do not, younger pets are less expensive to insure than older ones.
Some plans calculate the reimbursement amount based on a set price list for illnesses and treatments (called a benefit schedule). This method can leave you dangerously exposed if the costs in your area are higher than average. Calculating reimbursement as a percentage of the actual invoice is far less risky.
Most veterinarians will accept all pet insurances since you are prepaying the bill and then dealing with the insurance company yourself. However, if you and your pet have a favorite vet, you do want to check that yours will accept the plan you selected, before signing up for it. Another option, if you have a trusted vet, is to ask your vet for a recommendation of what company other pet owners say is a good insurer.
Two areas differentiate what seniors prioritize, compared with what younger people do: age friendliness and health-related value.
Regarding age friendliness, in the case of pet insurance, the concerns are almost entirely administrative. As you get older and become less focused on details (or less comfortable on computers where you may be handling most of your transactions), dealing with the complexities of invoices and reimbursements may become overwhelming.
Therefore, finding a supportive, reputable insurer is that much more of a priority, especially since you do not want to have to change insurers later and face pre-existing conditions that your pet may have developed since you first started insuring.
The health-related value of pet insurance can only increase as your health condition declines. You do not want to add the stress of not being able to care correctly for a beloved pet at a time when you need all your energy to manage your own health. How you get your pet to the vet is a separate issue, unrelated to the insurance itself. But if you do not have insurance, you may hesitate to go to the vet at all. And that's not a good thing.
In 2015, of the $1,250 cat owners spent on average on their cats, $390 (or 31 percent) was on medical costs. Of the $1,300 spent by dog owners, $477 (or 37 percent) was on medical costs. (Both spent about $530 on food and treats.) While these are averages, incidents do not happen every year but, when they do, their cost can be in the thousands.
Pet insurance plans can be divided into three general levels: basic, medium and high. 'Basic' plans, which help you pay for preventive care (vaccinations and wellness exams, for example) can start around $10-15/month. 'Medium' plans, which add certain conditions, hospitalizations and surgeries, can start at $35-40/month. 'High' plans, which cover all sorts of accidents, injuries and complex treatments, can run around $100/month.
Premiums can be affected by endless terms, options and exclusions. They can vary by geography and by your pet's breed and age. Each provider gives those factors different weights, so you need to get quotes from several viable providers to find the best package. Also remember that what you see advertised is not necessarily what you will pay; you will have to obtain a formal quote before making a decision.
As you compare policies and premiums, ask about discounts for insuring multiple pets; paying annually instead of monthly; having your pets spayed, neutered or micro-chipped; and belonging to associations or the military.
Deductibles play a role as well: like with our personal insurances, a high deductible lowers the monthly premium, but the insurance only comes into play for major occurrences where the total costs exceed that deductible. Everything below that will be ours to pay.
Lastly, the deductible we selected for our pet's plan is not the only thing we will pay. Since most injuries and illnesses are only covered up to 70-90 percent, our out-of-pocket co-payment could still be sizeable.
The criteria to evaluate different pet insurances should start with the price, how easy the entire process is, what is covered, when the coverage starts and how supportive the company is.
Price: Calculating the annual or monthly cost of a policy (or 'premium') will reflect your pet's age, breed, health condition, the location where you live and whether your pet is spayed or neutered. Next, that cost will be affected by the choices you make about deductibles, co-payments and any add-ons. Note that several insurers charge a one-time initial administrative fee ($25-35).
Ease of enrollment: Enrolling should be easy. How easy it is will give you a hint of how easy the company will be to deal with when you have to file a claim. Both the technology and the human side are important. How intuitive is the website in providing general information, guiding you through the quoting process, completing enrollment and sending you your policies and other how-to-use materials? And, if you need help from a human, how accessible and how helpful are they?
Coverage for accidents/illnesses and preventive care: Pet insurance is most valuable as coverage for unpredictable expenses, such as accidents and illnesses, where the costs can skyrocket. (Ninety-six percent of the policies written cover at least accidents and illnesses.) Preventive care is much easier to schedule into our budgets as its costs are predictable: annual wellness check-ups, vaccinations, annual teeth cleaning and monthly flea preventives. (In 2015, the American Pet Products Association estimated routine vet care to cost dog owners $235 and cat owners $196 per year.) Some policies will add wellness (or preventive care) to accident/illness policies. If the additional annual premium is less than those average costs, that add-on might make sense.
Waiting period for accidents and illnesses: Most insurers have waiting periods because they want to know you intend to keep the insurance and are not just signing up to use it for an incident, then intending to cancel. They are also concerned about pre-existing conditions, which they do not cover, so they may require a full vet visit in the 12 months before the policy date, or within the first 14 days. Anything reported there will be considered pre-existing. For accidents, waiting periods tend to run up to 15 days, although some insurers will cover a pet immediately. For illnesses, somewhere between 14 and 30 days is more normal. For orthopedic issues (mostly hip dysplasia and knee issues in dogs), the wait tends to run 3 to 12 months.
Customer support: A company's attitude towards customers starts with its website: how informative, how transparent and how easy to navigate it is. By the time you get to the 'enroll' step, you should feel very comfortable making a decision. Then, how easy is it to reach someone when you need them? Some insurers only have live support during normal business hours, but your emergency may happen on Saturday afternoon. Is that important to you? Lastly, how fast and how fairly do they process claims? Recommendations from your vet, friends or family are the best place to start researching that; online reviews would be next. Just remember that companies handling hundreds of thousands of customers will have some unhappy ones; try to gauge reviews fairly.
Along with premiums, other key components of your policy are deductibles and payouts. Those considerations are followed by details on protections and exclusions.
Deductible: The deductible is the dollar amount you have to pay towards covered expenses before the insurer starts to reimburse you. Some insurers offer different levels of deductibles: low, medium and high. Remember that the lower the deductible, the higher your premium will be. Also look at whether the deductible is annual, per-incident/condition or per-visit. Annual is usually best: you pay it one time and are reimbursed for covered expenses for the rest of the year. Per incident/condition means you pay the deductible only once for a problem. However, be sure to check if it is an 'annual' or 'lifetime' per-incident/condition deductible. That makes a huge difference: if you can find a 'lifetime' per-incident policy, you can avoid paying a deductible each year for an ongoing condition. The least attractive option is per-visit. It means you will be paying each visit, whatever the reason for the visit, and that may discourage you from taking your pet to the vet as often as is needed.
Reimbursement: How much you will be reimbursed (also called the payout) depends on the co-payment you selected. A 10-percent co-payment means the company will pay you 90 percent of the covered claim after the agreed-upon deductible has been met. The normal range of payouts is 70-90 percent. The higher the payout, the higher the annual premium. Some insurers also cap what they will pay each year, or over the life of the policy. Others have unlimited payouts. Again, the higher the cap, the higher the annual premium.
Warranty: Many policies offer you a 30-day money back guarantee. If within the first 30 days of your policy you wish to cancel, most companies will provide you with a full refund, provided you have not filed a claim. Just be sure to read the policy's fine print to see exactly under what circumstances you can cancel your contract and not be penalized in any way.
Age limits: Because older pets are more prone to arthritis, kidney issues or cancer, for example, they are more expensive to insure. They have also had a lot longer to develop a list of pre-existing conditions which will not be covered by pet insurance. Whether it makes sense to insure an older pet at all has to be thought through carefully. At some point, you may not even have a choice: although most insurers will continue to insure a pet already covered, it may refuse to insure pets on new policies after a certain age.
Eligibility: Some insurers will accept to cover a pet with a health condition and some will not. Even if an insurer will do so, before you commit to a policy you want to be very clear on what will be considered pre-existing going forward. Will it be just the initial health condition or anything in the future that could be indirectly attributed to it? Also look for breed-related exclusions: some insurers will exclude hereditary conditions in certain purebreds, for example.
Multiple pet discount: Some insurers will offer a discount of 5 percent, 10 percent or more on annual premiums if you insure more than one pet with them. However, this should not be the factor that decides between one insurer and another. After all, if you lose your second or third pet, the discount will likely disappear.
Owning a pet is a large responsibility. However, pets are also a tremendous source of joy. They can lower our stress, provide companionship if we are alone, get us exercising, add meaning to our lives, make us feel needed once the kids are gone and even provide security in the home.
Part of our responsibility is keeping them healthy and out of pain. If our resources are not limited or if we are disciplined enough to set aside a fund to cover whatever vet bills might occur, that should not be difficult. However, if we are concerned about the financial burdens of veterinary care, and do not want to have to make a life decision based on our ability to pay, pet insurance could be the solution.
Of the 150-170 million cats and dogs kept as pets in the U.S., only one percent of them are covered by pet insurance. That means many care decisions, particularly later in a pet's life, are being made on the ability to pay. Based on reports of the median retirement savings of Baby Boomers, many seniors may be able to deal with normal wellness care, but not with a $3,000 bill for surgery or broken bones. On the other hand, maybe a reasonable monthly insurance premium would be worth the peace of mind. It's a personal choice.