Americans love their pets. In fact, approximately 65% of US households own a pet. Unfortunately, pets occasionally get sick or injured, just like humans, and many pet owners are worried about being able to afford their medical bills. This is where pet insurance comes into play. While most pets in the US are not insured, this is a fast-growing industry and many people wonder whether this would be a wise investment. The short answer is: it depends.
If you have an older pet or a breed that is known for having a lot of health issues, then pet insurance might be worth looking into. Also, if you don’t have sufficient funds to cover an unexpected emergency, then pet insurance could potentially be helpful. Many plans cover illness and accidents (after a deductible which varies with insurance companies and plans), and some even cover wellness care. However, you’ll want to read the fine print, as many insurance companies do not cover breed-specific or genetic health issues, as well as pre-existing conditions. Also, monthly premiums tend to go up as your pet ages and pure breed animals are generally more expensive to insure than mutts. In addition, some insurance companies will not cover illnesses on pets past a certain age (which is when they are most likely to get sick).
An alternative to pet insurance?
Insurance companies are set up to make a profit and they take your pet’s age, breed, gender, and other information in order to determine how much to charge you. Many pet owners will end up paying more in monthly premiums than what they will receive back from the insurance company. If you have a young pet that is in good health and you have sufficient funds to cover an unexpected emergency, you may want to consider opening a separate bank account to serve as your pet’s “health insurance”. Obviously, this carries the risk that if your pet gets sick or injured early on, then you would have to pay for its care out of pocket. However, if you are able to afford an unexpected emergency, you could save money in the long run by having a separate bank account.
If you decide to open a separate checking account for your pet, it’s important to save the right amount every month. One way to determine how much to save is to leverage the expertise of insurance companies by obtaining free quotes. For example, ASPCA’s website offers free quotes by answering a few questions about your pet. You may want to obtain quotes from several insurance companies to determine an average. You can then setup an automatic monthly deposit for that amount into your dedicated checking account. (Speaking of checking accounts, is your bank account paying you interest? If not, it might be time to switch banks!)
It’s important to only take money out of the account for emergencies, rather than basic expenses such as boarding or wellness care. Also, in order to protect your account’s balance, you may want to apply a “deductible” just like an insurance company would. In other words, if you obtain an insurance quote for $50 a month with a $250 deductible, then any pet treatments below $250 should come out of your primary checking account rather than your “pet insurance” account. Any amount over $250 would be pulled out of your “pet insurance” account. That should help you preserve your balance for a true emergency.
Bottom line: If you have an older pet or if you find yourself going to the vet several times a year, consider getting pet insurance. On the other hand, if your pet is young and in good health (and you have enough cash to cover an unexpected emergency), you could save money in the long run by opening a separate checking account for your pet’s urgent medical needs. If you have any doubts, you may want to discuss this question with your vet to get a recommendation based on your pet’s breed and health condition.
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