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Do You Really Need Pet Insurance?

Americans spent over $55 billion on their pets last year, according to the American Pet Products Association. The largest percentage went towards food. But pet owners shelled out approximately $13 billion just for veterinary care, up 40 percent from 2006.

If you treat your beloved pet like a member of the family, you want to make sure that they get the best medical treatment when illness or injury strikes. Purchasing pet insurance can offset some of the costs. But you need to make sure it’s really worth it before you sign on the dotted line.

How It Works

Pet insurance works similar to any other type of insurance policy, with some slight differences. You buy a policy for the coverage amount you want and pay a monthly premium to the insurance company. Premiums are generally based on your dog’s breed, age and health status. Your deductible is set at the amount you choose and can be applied yearly or on a per-incident basis.

When you take your pet to the vet, you pay all the costs of care up front. To get reimbursed, you have to file a claim form with the insurance company and provide them with copies of your receipts. When you buy your policy, you can choose what percentage of costs you want to be reimbursed for, up to a maximum of 90 percent. Depending on the insurer you choose, there may be a waiting period before you can begin filing claims for treatment.

What It Covers

The types of treatment that pet insurance covers varies widely based on the policy. For example, Trupanion covers up to 90 percent of the costs of vet care if your pet is sick or injured. This includes things like surgery, hospitalization, lab tests, medications, prosthetic devices and medical care received at emergency clinics. If your pet needs routine medical care, preventive care or treatment for a pre-existing condition, the policy won’t cover any of those costs.

Some policies only cover standard medical treatments but some will also pay for alternative treatments, such as acupuncture, chiropractic visits, stem cell therapy and hydrotherapy. Coverage may or may not be available for things like grooming and dental care. If your pet has a predisposition for a particularly hereditary condition, you may be able to get coverage but you’ll likely end up paying more for your policy. Some insurers won’t cover working dogs, like police or therapy dogs, while others require you to pay higher premiums if your pet hasn’t been spayed or neutered.

How the Costs Breakdown

Just as your coverage options vary, so do the amounts you’ll pay for pet insurance. For example, ASPCA Pet Insurance offers four coverage levels, ranging from $2,500 to $7,000 per incident. You can choose an annual deductible of $100, $250 or $500 per pet. The average monthly premium breaks down to about $31. Premium rates are slightly lower for cats compared to dogs.

Premium rates from Veterinary Pet Insurance coverage vary based on the amount of coverage you buy. The comprehensive major medical plan for dogs runs between $25 and $35 a month. For cats, the cost is lower, around $15 to $22. You can get just emergency care coverage for around $10 a month, which offers a maximum annual benefit of $14,000.

Is It Worth It?

In terms of whether it’s actually a wise investment to purchase pet insurance, it really depends on how healthy your pet is and how much you’re willing to spend on their medical care. The American Pet Products Association estimates that the average annual cost of pet care has jumped 15 percent for dogs and 28 percent for cats over the last year. With the cost of veterinary care expected to rise, having a pet insurance policy in place could soften the blow if your pet needs expensive medical treatment.

Related Article: 6 Insurance Policies You’re Wasting Money On

On the other hand, pet insurance may be a waste of money if your pet’s relatively healthy and you’re only paying for routine medical care. There are also lots of options for getting low-cost pet care which are worth looking into. For example, you may be able to get discounts on medications or routine visits through your local animal shelter. Many retail pet stores also offer in-house grooming and preventive care, which can you save you money on things like heartworm medication and vaccinations.

One of the easiest ways to save money on your pet’s medical expenses is to take good care of them. Doing things as simple as choosing the right foods and making sure they get plenty of exercise can go a long way towards improving their health. Building up a savings account reserved specifically for your pet care costs can give you the financial buffer you need if an illness or emergency hits.

Photo Credit: Veterinary Pet Insurance (VPI)

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She's worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
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