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If you get sick, doctor’s visits are often covered with a manageable out-of-pocket cost. On the other hand, taking your pet to the vet can cost more than your rent payment. That’s where pet insurance can help.
Pet insurance minimises the financial burden of caring for an animal and provides peace of mind if your pet needs to be rushed to the emergency room. Pet owners who have pet insurance are more likely to take their pets to the vet.
Understand the pros and cons of pet insurance and how it differs from human health insurance to better understand whether it’s right for your pet and your budget.
Pet insurance is
Pet insurance is a special type of insurance that covers unexpected injuries, illnesses and veterinary costs for check-ups. Everything from bee stings and broken bones to chronic diseases like diabetes and cancer can be covered.
Pet owners spent $38.3 billion on veterinary care and products in 2023. Pet insurance helped defray some of these costs. According to a 2023 North American Pet Health Insurance Association (NAPHIA) industry report, more than 5.5 million pets in the United States were insured, with total premiums of $3.9 billion.
Here’s a simple explanation of how pet insurance works.
- When you enroll your pet in pet insurance, you typically pay a monthly premium, which can range from $17 to $56 per month depending on your pet’s age, breed, location (where you live), and the coverage you choose.
- In exchange, the insurance company agrees to reimburse a portion of covered veterinary expenses like surgery, medication, hospitalization, etc. Some insurance companies even pay the veterinary clinic directly.
- Like human health insurance, there are often deductibles (a certain amount you must pay out of pocket before the insurance kicks in), co-payments (how much you have to pay out of pocket for services after you’ve met your deductible), and annual reimbursement limits.
There are three main coverage options for pet insurance: These policies vary widely in terms of price and what is offered.
- Accident Only Plan: It covers injuries caused by accidents, such as broken bones or ingesting foreign objects.
- Comprehensive plan: These plans combine accident and illness coverage and often include treatment for common illnesses, cancer, chronic diseases and prescription drugs.
- Wellness Plan: It covers routine preventive care such as vaccinations, flea and tick control, and annual checkups.
Some pet wellness plans are prepaid veterinary care plans. Many veterinarians and animal hospitals offer prepaid plans that focus on preventive care services, like vaccinations and regular checkups, with discounts on other services. These plans rarely cover unexpected illnesses or injuries.
Pet Insurance vs. Human Health Insurance
Like people, animals have a variety of medical needs, from simple checkups and regular dental cleanings to treatment for chronic illnesses and cancer. And just like people, medical care can be a significant financial burden.
Human health insurance has a longer history and a more integrated and streamlined system with health care providers, designed to ultimately make health care affordable.
Pet insurance is a relatively new industry that helps pet owners when their pets get sick unexpectedly, but the two types of insurance work very differently. Take pre-existing conditions, for example.
Unlike humans, where insurance companies cannot deny coverage or charge higher premiums for pre-existing conditions, covering pre-existing conditions in pets can be a grey area, with many policies excluding certain conditions or charging higher premiums.
The following table explains some other important differences.
| Features | Human Health Insurance | Pet Insurance |
|---|---|---|
| Reimbursement Model | Typically, payments are made directly to the health care provider, and patients are responsible for copayments or coinsurance costs. | They typically operate on a reimbursement basis, where you pay your vet bill when you receive the service and then submit a claim for reimbursement. |
| Cost Structure | Premiums average more than $300 a month and can be subsidized by employers or the government. | Premiums average $49 per month for dogs and $28 per month for cats, and also vary by age, breed and location. |
| Coverage | There can be no lifetime coverage limits imposed. | Many policies have annual or lifetime coverage limits. |
| Claims process | Billing is typically handled directly between the provider and the insurance company. | Claims are typically submitted online following a veterinary appointment. |
| Preventive medical insurance | This usually includes coverage for preventive services and may even be “free.” | Most standard plans don’t cover routine or preventive care, but some offer additional health services for an additional fee. |
| network | Provider networks are often limited | You can usually see a licensed veterinarian without having to worry about in-network or out-of-network providers. |
The pros and cons of pet insurance
The most attractive benefit of pet insurance is the financial protection it offers. As with all financial products, you should consider the pros and cons before purchasing pet insurance.
Benefits of pet insurance
- Customizable coverage options: With three main coverage plans and additional options available, pet owners can customize insurance to fit their pet’s needs within a set budget.
- Employee Benefits: Many employers are incorporating pet insurance into their employee benefits packages, making pet insurance even more affordable and accessible.
- Financial relief for unexpected veterinary bills: Pet insurance covers the majority of expenses incurred, from health care services to surgery and emergency care, greatly mitigating the financial impact of unexpected veterinary treatment.
- Flexible Veterinary Choice: While human health insurance dictates which doctors you can see, pet insurance allows pet owners to receive treatment from licensed veterinarians and specialists.
- peace of mind: Knowing that financial protection and assistance is available, pet owners don’t have to make difficult decisions or forego expensive treatments solely because of cost.
Disadvantages of pet insurance
- Copayments and deductibles: Like human health insurance, pet insurance uses copayments, deductibles and coinsurance premiums, which are also expenses you pay out of pocket up front.
- Exclusions and Limitations of Liability: Pet insurance often comes with exclusions and limitations, especially when it comes to pre-existing conditions, routine healthcare and certain treatments, unless you obtain additional coverage.
- Copayment: Pet insurance has a reimbursement model, meaning pet owners have to pay a service fee to the veterinarian or emergency clinic and then go through the refund process.
- Premium Rates: Young, healthy pets will have lower premiums, but as your pet gets older, premiums may increase. Over time, a healthy pet may outweigh the financial benefits of higher premiums.
- Underutilized benefits: If your pet is healthy and doesn’t require most of the veterinary care that pet insurance provides, some pet owners may see a lower return on investment.
Do I need pet insurance?
Whether or not you need pet insurance ultimately depends on factors like your financial situation, your pet’s age, breed, and any known health predispositions. Younger, healthier pets are less expensive to insure, but accidents can happen at any age. Plus, there’s the cost of veterinary care in your area.
If you can’t afford unexpected, expensive vet bills, insurance may be a wise choice, but pet owners should be prepared for upfront and out-of-pocket expenses. This is where opening a savings account or applying for a medical credit card can help.
Depending on the type of savings account, you may be able to use the interest earned to pay for your premiums. It’s also important to read the fine print carefully to understand the costs, coverage and limitations.
Conclusion
Pet insurance can be a game changer by giving pet owners the opportunity to receive comprehensive, advanced treatments that may otherwise be out of reach.
While the American Veterinary Medical Association (AVMA) encourages veterinarians to educate their clients about pet insurance, pet owners must research their options and decide whether pet insurance is a worthwhile investment.
