Pet Insurance: Good idea?

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If your family includes a pet or two, you'd probably do anything to keep them safe, healthy, and happy. But what if your pet was diagnosed with a treatable cancer? Would it be a medically unnecessary death sentence or a $10,000 drain on your family's finances? Pet insurance could eliminate your need to choose between these two undesirable options.

According to the American Pet Products Association (APPA), today approximately 70 million households include pets. Cats and dogs make up the majority of them, but insurance can be purchased for all types of pets. If you’re considering coverage for your special pet, here are some helpful tips:

How Pet Insurance Works

Pet insurance is administered similar to human health insurance plans. You pay premiums to maintain coverage. There are deductibles, co-pays, and the majority of policies place limits on the amount the insurance company will pay. Payments take two forms, either a direct payment to the veterinarian or a reimbursement to you for qualifying claims. The benefit of the “reimbursement” option is you are free to choose the veterinarian who will treat your pet.

Even though most pets are covered, some pure breeds or animals prone to hereditary health issues may not be insurable. Pets with pre-existing conditions may also be excluded from coverage.

Provider and Coverage Options

Pet insurance has become popular; thus, there are a variety of pet insurance providers to consider. Check out these lists of the Top 10 best pet insurance companies:  https://www.consumersadvocate.org/pet-insurance/ or https://www.top10petinsurancereviews.com/. The line-up is different for each, but the information provided should be helpful. And if you’re a member, USAA, which provides insurance for military families, also offers pet insurance!

Selecting the right insurance for your pet can be as confusing as selecting your own personal policy.  It’s important to carefully review the plan options from several insurers to pick the best coverage for your pet. Some of the common plans include:

  • Pet Wellness Plan – Typically covers routine exams and treatments, including vaccinations, flea and heartworm prevention.
  • Accident Only – Pays benefits if your pet is injured due to an accident. This policy will not reimburse you for the cost of care related to illness.
  • Basic Coverage – Helps pay for care and treatment related to an injury or health issue, including cancer. These policies provide lower reimbursement and often place a cap on the amount paid per accident or illness.
  • Comprehensive Coverage – Helps pay for almost any type of care or treatment your pet might need. You’ll be reimbursed for costs stemming from allergies, illness, and accidental injuries and emergencies, including office visits, prescriptions and x-rays.
  • Time-Limited Policy – Covers treatments up to a specified dollar amount and a specified term for reimbursement (e. g., $2,000 or 12 months). Once one of these parameters is met, the policy stops further payments.
  • Maximum-Benefit Policy – Covers treatments up to a specified dollar amount, but for an unlimited term.


Cost of Pet Insurance

The cost of the different pet policy-types will vary based on the benefits provided:  the more extensive the benefits, the more costly the policy. Cost can also be affected by the breed, age, and health of your pet. The monthly premium could range between $10 and $100+ depending on the combination of these factors. 

Pet insurance will rarely cover every health issue your pet might encounter. And remember that in addition to the premium, you are also liable for deductibles and co-pays, as well as expenses that exceed the limits of the policy.

Best Time to Buy

To avoid exclusions for pre-existing conditions, it’s best to buy pet insurance when you bring your new little friend home. The longer you wait, the more expensive the coverage will become.

What if you haven’t yet insured your pet, but think it would be a good idea? Don’t wait! Do it before the weather gets warm. When pets spend more time outdoors, they’re exposed to a host of potential dangers that increase their chances for illness or injury - plants, heat, other animals, bikes/vehicles.

Summary

Our pets are considered family and we should be prepared to provide them with the best care should they become ill or seriously injured.  Pet insurance is a great way to make sure you can do this without breaking the bank. Consider how much you can afford to spend on your pet’s potential medical needs, then look for a policy that will pick up the remaining costs - or the best policy that works with your budget. It may save you from having to make a really tough decision in the future.

Kathy Hower, CFP, is Director of Financial Planning and Senior Wealth Advisor at Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website or email Kathy.

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