welcome us . As a reminder, we take listener questions about every month on Instagram, so follow on Instagram at WeeZful about Pet insurance, if you’re not already and uh, we’ll pick a question that feels interesting and applicable and relevant and we’ll answer it as always my standard disclaimer. I am not a licensed Financial professional; this is not Financial advice. This is just what would Katie do. How do I think about this?
What would I do if I were in your shoes, this week’s question is from Rachel is pet insurance, a good financial decision? How much coverage am I really getting, and would I be better off having a dedicated pet emergency fund? I see so many gofundme’s for people’s pets. Oh, that is so depressing and it seems like there’s a general lack of financial planning around Pet Health. Pet insurance is one of those things that can either be a lifesaver or like a total waste.
So I’m glad that you asked the purpose of having any type of insurance is merely to protect your downside. It’S for limiting the risk that you are exposed to. So we’re legally required to carry some types of insurance like health insurance in certain States or car insurance. If you have a vehicle, whereas some other types of insurance like pet or life, are optional, when you get quotes for pet insurance, you’ll usually have to tell the insurer things about your pets like the age, the breed where you live, how long you’ve had them info That’Ll help the insurer determine how risky you are to insure you’ll also likely have to provide their vet records so that they can establish any pre-existing conditions. This all will determine how much you have to pay every month to carry the insurance, that’s known as your monthly premium.
Does this sound familiar aka the way your health insurance works? You’Ll also usually have to divulge health information from your pet’s past again, sometimes this is cell phone volunteered. Sometimes they will find this in their medical records, but you should not lie. Is the point? Typically, if you insure a very young animal with no health problems, your premiums will be lower than if you are ensuring an aging animal with an established health history already, because the insurance company wants to incentivize you to carry insurance for a long time before they think You are going to need it.
I went through the sign up process for the purposes of this answer with my five-year-old dog Georgia. She is a German shepherd and for sixty dollars per month. Their base plan would include Diagnostics like blood tests, urinalysis x-rays, MRIs, lab work, CT scans, ultrasounds, certain procedures like outpatient, specialty, Emergency Care, hospitalization surgery and medications like injections and prescription medication. To some degree, they would cover some part of it right now for an additional twelve dollars per month. They would also cover vet visit fees as well, so the sixty dollar per month plan that we’re looking at for this example about Pet insurance.
They would pay eighty percent of the bill after I pay a two hundred and fifty dollar deductible up to twenty thousand dollars per year. So suppose your dog requires a five thousand dollar surgery that is covered under these terms. You would first owe the two hundred and fifty dollar deductible, and they would cover eighty percent, so your out of pocket here would be one thousand two hundred and fifty dollars, rather than the full five thousand now. The way I think about these types of risk assessments is, I know I would pay 720 per year in premiums and another 250 toward the deductible every year. You do get a discount if you pay annually in full.
So that’s something to keep in mind, but if I’m paying monthly, that’s nine hundred and seventy dollars per year in kind of guaranteed out-of-pocket expenses before this insurance is going to begin paying for for things. And you would have to cover again twenty percent of the expenses. Because they’re only covering eighty percent, so it’s not like your costs are zero. After you pay the 970 So it seems to me that this would be an excellent thing to have. In the event, your dog needs a major catastrophic operation like if we’re talking a five or ten thousand dollar surgery.
In that event, if you have insurance you’re going to be paying three thousand dollars out of pocket instead of ten thousand dollars, that said there will likely be, and hopefully because it means your pet is healthy. If this is the case, many years where you’re not getting your money’s worth, AKA you’re, paying 720 in premiums and maybe even a 250 deductible for little things, but you’re not asking the insurance to kick in for anything major. So this type of insurance can really help with cash flow issues. Many many people would be in a hard spot and understandably so, if they suddenly had to spend five to ten Grand on a pet surgery unexpectedly, so I think it could make sense. That said, it is also possible that you could put that same 970 per year every year into a pet emergency fund that you just hang on to and then use it when the time comes, if necessary.
So again, Insurance limits your downside. It can help with cash flow management because you’re just paying for the premium every month and it’s kind of guaranteed. But obviously – and this is, I think, the thing we’re stating here – insurance companies overall are profitable because they make more money than they spend on the vast majority of the people or the animals. They are insuring being a pet parent, especially with a dog very expensive, whether you are paying for insurance or you’re self-insuring, by setting aside cash to use in the event of an emergency either way, it is probably smart to pick at least one of these two things about Pet insurance.
