Pet Health Insurance 101

Picture this. You’re out playing with your dog, and something spooks her. She darts around the corner and disappears. Panic sets in, and you frantically search the neighborhood. Thankfully, she’s ok, but what if she had been hurt? An unexpected illness or injury can cost thousands of dollars, and most likely, you haven’t budgeted for it. This is where pet insurance can help.

Chances are you’ve heard of pet insurance, but didn’t purchase it because it was too confusing or too expensive. Let’s clear the air! How does it work, and what does it cover? And most importantly, is it right for your family?

How does pet insurance work?

Like human insurance, there are monthly premiums, a deductible, and co-pays. The monthly premiums depend on the level of reimbursement percentage and the deductible. If you choose to be reimbursed at a rate of 90% for costs above your deductible, your premiums will be higher than if you chose to be reimbursed at a rate of 70%. In addition, a lower deductible means higher monthly payments.

For example, let’s say that your took your dog in for an emergency surgery that costs $3,500. Your deductible is $500, and the policy pays 90% of costs once you hit $500. In the end, you are responsible for paying the deductible of $500, as well as the remaining 10% of the costs. Your insurance company will pay 90% of the $3,000 (or $2,700) and you will be responsible for 10% ($300). Also, unlike human insurance, most insurance companies require you to pay for the entire cost up front, and then submit a claim to be reimbursed. So keep in mind that even though you HAVE insurance, you will still need to budget for unexpected expenses.

The costs also vary depending on the health, age, and breed of your dog. Monthly premiums start at about $22, but could go up to $40-$50 per month based on the breed and your deductible and reimbursement percentage. Premiums are higher for purebreds as they are more likely to have specific illnesses or conditions such as hip dysplasia, heart disease, and diabetes.

What does pet insurance cover?

The coverage depends on the policy you choose. Some plans cover annual checkups, vaccinations, spay and neutering, emergency care, prescriptions and surgery while other policies are limited to emergency care and illnesses. Be sure to get at least three quotes and compare them apples to apples. Most insurance plans will not cover pre-existing conditions, and there may be a waiting period for conditions like hip dysplasia.

Does the age of my dog matter?

Yes, the age of your dog will influence premiums. However, most insurance companies will cover older dogs up to a certain age. We’ve seen one cap it at age 14! If you choose to cover your new puppy throughout his life, you could pay thousands in premiums without ever having a major incident. Say the premium is $30 per month and you pay it for 10 years. That adds up to $3,600 (assuming pricing does not increase). It’s definitely a risk. But so is NOT having insurance.

How can I keep costs down?

Whether you decide pet insurance is right for you, there are a few things you can do to be proactive about your pet’s health that could reduce long-term costs.

• Keep your pet up-to-date on vaccinations.
• Spay or neuter your pet.
• Guard against parasites.

Another way to be proactive is to open a savings account specifically for a “pet emergency.” Diligently deposit a certain amount every month, such as $30-$50. Watch it grow over a few years. When an emergency comes up, you’ll have the cash as if you had insurance. If you never need the funds, hooray! You have just saved enough money to take your family on a terrific vacation!

Does your employer offer pet insurance in their benefits package?

Yes, some companies actually include pet insurance in their benefits packages. With more and more families bringing a pet into their loving home, companies are seeing this as another way to increase employee retention and help their employees guard against the large expenses that could break the bank. Check with your employer, they just may offer pet insurance.

To many of us, our dogs are like our children, and we want to protect them. It’s up to your family to decide whether pet insurance is right for you. Depending on the age of your pet, do the math. Calculate the amount you would pay in insurance premium