The Financial Benefits of Pet Insurance

Making sure your pet stays in good health is one of your core responsibilities as a pet parent or carer. Unfortunately, veterinary care isn’t cheap, and costs are rising. Emergency vet visits, in particular, can run into thousands of dollars.

This is where pet insurance comes in. If your pet were to fall ill or suffer a life-threatening injury, it can alleviate the financial burden and ensure you don't have to make difficult choices regarding your pet's care.

Let’s explore the financial benefits of pet insurance and see if it’s a worthwhile investment for you and your furry companion.

Cost of Veterinary Care

Veterinary care costs vary widely depending on the procedure and the issue's severity. Routine checkups, vaccinations, and preventive care are generally less expensive, typically costing around $100 to $300 per visit.

On the other hand, unexpected emergencies often come with heftier price tags. Think of broken bones, ingestion of foreign objects, or severe allergic reactions. Costs for such issues can start from $500 and easily escalate to thousands of dollars if surgery or extended hospital stays are needed.

Here are some common dog and cat emergencies and their typical costs:

Dog

• X-ray: $150-$250
• Ultrasound: $300-$600
• Hospitalization: $600-$3,500
• Wound treatment: $800-$2,500
• Oxygen therapy: $800-$3,000
• Emergency surgery: $1,800-$5,000

Cat

• X-ray: $150-$250
• Ultrasound: $300-$600
• Hospitalization: $600-$3,000
• Wound treatment: $800-$1,500
• Oxygen therapy: $500-$2,500
• Emergency surgery: $1,500-$3,000

As you can see, some of the expenses above are quite high and can create significant financial strain, especially if you're struggling to make ends meet.

How Pet Insurance Can Help

Pet insurance acts as a financial safety net for unexpected veterinary expenses, which can be substantial. Instead of bearing the full cost of veterinary bills, pet owners typically pay a monthly premium, after which the insurance covers a significant portion of the expenses. Depending on your policy, your insurer can reimburse you for up to 90% of your vet bills.

Here’s a breakdown of the main benefits of pet insurance.

Provides coverage for accidents and illnesses

Most pet insurance plans offer coverage for many costs related to accidents and illnesses, including vet exam fees, diagnostic tests, medications, surgeries, specialist care, and hospital stays.

Some plans include a wellness coverage add-on for routine care, helping to offset the costs of vaccinations, annual exams, and preventive treatments.

All this means you won't have to shoulder the entire financial burden of vet care alone. You might still incur some out of pocket costs, but they are likely to be minimal compared to what you would pay without insurance.

Gives you peace of mind

Knowing a portion of the costs will be covered can significantly reduce stress and anxiety during a pet's medical emergency, allowing you to focus on your pet's recovery.

Helps you get the best possible care for your pet

Perhaps most importantly, pet insurance allows you to make decisions based on your pet's health needs rather than what you’re financially capable of. This is especially valuable during emergencies, where timely and appropriate medical care can make a significant difference in whether your pet gets well or not.

Important note: Most pet insurance policies typically work on a reimbursement model. This means you'll pay the vet expenses upfront and then claim reimbursement from your insurer.

However, some insurance companies will pay a vet directly. They may have partnerships with vets that allow them to make payments for treated pets at checkout. Others require you to submit a claim along with a signed reimbursement from your vet, after which the company sends the vet the required payment if your claim is approved.

Pet insurance carriers with direct vet pay could be an attractive option if you can’t pay for vet expenses upfront or don’t want to wait for reimbursement from your insurer to replenish your savings. However, bear in mind that policies with direct vet pay are likely to cost more than those that work on a reimbursement model.

Calculating the ROI

When considering pet insurance, evaluate the return on investment (ROI) to fully understand its financial benefits. One way to do this is to compare the monthly premiums you pay for pet insurance to the potential savings on veterinary expenses.

Costs of pet insurance

According to the North American Pet Health Insurance Association (NAPHIA), the average cost of pet insurance is as follows. The exact cost varies depending on factors like your pet’s breed and age.

Similar to human health insurance, pet insurance policies have deductibles, reimbursement limits, and payout limits that affect your out-of-pocket costs:

• Deductible: This is the amount you pay upfront for covered vet expenses before your insurer starts reimbursing you. Deductibles can range from $100 to $750 annually or more.
• Reimbursement Limit: This is the percentage of covered expenses your insurer will reimburse you after a claim. The typical range is 70%-90%.
• Payout Limit: This is the maximum amount an insurer will pay towards eligible vet bills. Limits can vary by policy and can be set annually, per condition, or per pet lifetime. For example, many insurers have an annual payout limit that ranges from $5,000 to unlimited.

Comparing costs vs ROI of pet insurance

With the above figures in mind, is pet insurance worth it? Let’s try to answer the question with an example.

Consider a scenario where you’re paying $50 per month for pet insurance. Over a year, this amounts to $600 per year. Now let’s say your pet suffers from a broken leg requiring surgery. The cost could easily reach $5,000 or more. With pet insurance, you'd likely only be responsible for the deductible (perhaps $250) and a percentage of the remaining bill (say 20%), depending on your reimbursement rate.

So instead of paying the entire $5,000 out of pocket, you’ll only have to pay $1,200. That translates to savings of about $3,800. And even if you include the total annual premium of $600, you’ll still have saved $3,200 in a year.

Pet insurance becomes even more valuable as your pet ages. They're more prone to developing health issues that require ongoing treatment, potentially costing thousands of dollars over a pet's lifetime. Pet insurance can help manage these costs and ensure your pet receives the care it needs, regardless of age.

Insurance vs pet emergency fund

When it comes to pet insurance, there's a chance that you could faithfully pay your monthly premiums for years but ultimately end up never needing to use your insurance. Or your total annual premiums might end up being higher than your actual veterinary expenses. To avoid that, some pet owners, instead of paying for insurance, set aside an amount each month into a savings account specifically for pet emergencies.

Exclusions

It's also important to remember that most pet insurance policies have some exclusions. For example, many plans don’t typically cover pre-existing or hereditary conditions or elective surgeries or procedures. Take into account these exclusions when evaluating the potential ROI of pet insurance.

Ultimately, while there are clear financial benefits to having pet insurance, the final decision as to whether it’s worth it is a personal one. Consider your pet's age, breed, and overall health, as well as your budget, to make an informed decision.

Conclusion

Pet insurance offers a wealth of benefits for pet owners. Specifically, by covering a portion of veterinary bills, pet insurance can significantly reduce your out-of-pocket expenses, help you focus on getting the best care for your pet, and provide much-needed peace of mind during a stressful time.

While there are monthly premiums to consider, the potential savings from even one major medical emergency can outweigh the total premiums paid, making pet insurance a wise investment.

Not all pet insurance policies are created equal, however. Carefully evaluate various options to ensure you select a policy that meets your needs and provides the best value for money. Consider coverage details, exclusions, reimbursement models, deductibles, annual limits, the insurer’s reputation for customer service, and the ease of the claims process.

Consulting your vet can also be helpful. They can offer insights into common health issues for your pet's breed and age, which can help you choose the best possible plan for it.