Your cat or dog is more than your pet: they are a member of your family. But just like your household's human members, sometimes they need to see a doctor.
While medical care for your four-legged best friend can quickly drain your bank account, there are options available to help ease the burden. You can consider protecting your finances by purchasing a pet insurance policy. Here, we’ll explore pet insurance so you can determine whether obtaining the coverage fits your money management strategy.
Pet insurance is health insurance designed specifically for animals. While some insurers will cover horses, rabbits, birds, and other exotic pets, most plans only protect dogs and cats.
There are three main types of pet insurance:
Accident and Illness (A&I) is the most robust coverage and covers both disease and injury. Examples of covered events include diabetes, cancer, infection, broken bones, and torn ligaments.
Accident Only (AO) is a budget-conscious option that covers injury only so you can avoid surprise vet bills. Examples of covered events include broken bones, torn ligaments, injuries due to vehicle impacts, or wounds due to an attack from another animal.
Preventive or Wellness coverage is an add-on to either an A&I or AO plan and covers routine care. Some examples of covered events include annual checkups, vaccinations, microchipping, dental cleaning, and spay or neuter procedures.
Generally, your plan will help pay for surgery, hospitalization, and required medication. Your policy may also cover end-of-life care such as euthanasia, burial, or cremation.
Typically, pet insurance won’t cover pre-existing conditions, elective procedures, or breeding. Some plans may also limit or restrict coverage for hereditary conditions, prescription diets, and behavioral therapies.
Important Note: Pet insurance policies vary from insurer to insurer and from plan to plan. Review your policy carefully to understand what is and isn’t covered.
Your pet’s age plays a big role in determining whether or not it qualifies for coverage. For example, insurers generally won’t cover puppies or kittens until they’re at least a couple of months old. Conversely, your pet may not be eligible to enroll in a plan if it’s more than eight years old. An existing policy should remain in place regardless of age if you make timely premium payments.
Your insurer may also want to verify your pet’s current health status. The company could require you to submit veterinary records or have your pet undergo a medical examination before issuing a policy.
Important Note: Regular coverage may be subject to a waiting period of around two weeks, but it could be longer for select medical conditions.
With health insurance, you’re often required to see an in-network provider in order for the insurer to cover the visit. With pet insurance, you can usually take your pet to any licensed provider.
Typically, you’ll have to pay the vet bill in advance and file a claim to be reimbursed. You’ll get reimbursed up to a predetermined percentage of the cost of care. Your reimbursement percentage may vary by condition or procedure. However, some insurers will pay your pet’s provider directly so be sure to familiarize yourself with your specific plan’s approach.
According to the American Society for the Prevention of Cruelty to Animals (ASPCA)1, routine care can run a pretty penny. Here are some of the expenses you can expect, on average:
Annual checkup and vaccines: $225 for a dog/$160 for a cat
Annual preventative medicine: $185 for a dog/$140 for a cat
Spay or neuter procedure: $300 for a dog/$150 for a cat
However, those costs pale in comparison to the price of emergency care. According to Betterpet2, a single incidence of gastroenteritis or poisoning could result in a $3,000 vet bill. If your pet has a seizure or breaks a bone, treatment may cost upward of $5,000. The cost of worst-case scenarios, such as your pet getting struck by a car, could reach five figures.
Based on data from the North American Pet Health Insurance Association3, here are the average annual pet insurance premiums as of 2022:
Accident and Illness: $640 for a dog/$387 for a cat
Accident only: $200 for a dog/$122 for a cat
Factors that impact your premium include:
Pet type: Dogs typically cost more to insure than cats.
Policy type: A&I policies cost significantly more.
Deductible: A higher deductible generally results in a lower premium.
Reimbursement percentage: A higher percentage will cost more.
Payout limit: The higher the limit, the more expensive the coverage.
Important Note: Your deductible may apply per incident (instead of per coverage period). Your payout limit may apply per year or per procedure.
Let’s consider a hypothetical scenario to see how much pet insurance could save you. Suppose you get a new dog as a puppy, and she lives for 15 years.
You cover the following costs out of pocket throughout her life:
Spay procedure: $300
Annual exams and vaccines: $3,375 ($225 X 15)
Annual preventative medicine: $2,775 ($185 X 15)
Two incidences of gastroenteritis: $6,000 ($3,000 X 2)
One incidence of broken bone: $5,000
Your total spend on your dog’s medical care is $17,450.
Now, let’s say you have an A&I policy for the entire 15 years. For the sake of simple math, you have no deductible.
You pay $9,600 in premiums ($640 X 15) and get reimbursed for 80% of the vet bills you cover ($13,960). That means, you effectively pay $3,490 for those procedures ($17,450 - $13,960).
Due to the coverage, you spend only $13,090 on your pet’s medical care ($9,600 for premiums and $3,490 for your portion of the vet bills). Thus, by securing and maintaining pet insurance, you ultimately save $4,360 over your pet’s lifetime ($17,450 - $13,090).
Pet insurance can help you save significant money especially if your furry companion requires frequent or emergency care. However, the coverage does more than just preserve your budget. It gives you peace of mind knowing you can take care of your pet the way they deserve without financial worry.
Your life is multifaceted, and pet insurance is just one type of coverage to consider. Consider chatting with a financial professional to determine what other financial protection you may need.
1 https://www.aspca.org/pet-care/general-pet-care/cutting-pet-care-costs
2 https://betterpet.com/emergency-vet-costs/
3 https://naphia.org/industry-data/section-3-average-premiums/
This article is provided for general informational purposes only. New York Life Insurance Company does not offer pet insurance. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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