In the United States, we are now spending more money than ever on our pets.
According to a 2017 report by the American Pet Products Association (APPA), Americans spent nearly $70 billion in the pet care industry. Yes, billions. From 2016 to 2017, there was an increase of 4.1% and the APPA estimates a 3.7% increase in spending from 2017 to 2018. That’s a growing trend that rivals what U.S. parents spend on childcare.
The North American Pet Health Insurance Association (NAPHIA) reports the total combined written premiums for pet insurance in the U.S. for 2017 was $1.2 billion. That is a 23% increase in veterinary care spending from the previous year.
We are in love with our pets and it shows. For instance, the top influencers in 2017 were pets, according to Forbes. So, how did we get here?
In the 1960s, American pet owners collectively began to humanize their pets and today millennials are continuing the trend in a big way, with many choosing to have pets over having children. Currently, this age group is more likely to purchase pet insurance than any other group.
And while an increasing number of pet parents get insurance each year, only about 1% to 2% of the 90 million dogs and the 94 million cats (as pets) in the U.S. are covered by pet insurance. Nonetheless, from 2017 to 2018, there was a double-digit increase (17%) in the number of pets covered by pet insurance.
RISING COSTS IN PET CARE
With the rising costs of pet insurance, which now includes expensive procedures such as sonograms, MRIs and chemotherapy treatment, it has become increasingly important that you know your options.
Here’s what every pet parent needs to ask: Am I ready to make a difficult financial decision if my pet gets sick or injured?
Let’s look at an example. What if disaster strikes—your 7-year-old Labradoodle is hit by a car and you are faced with a $4,300 vet bill. Would you be able to afford the out-of-pocket expense or would you have to take on the debt to cover the cost of the procedure? Worse, would you make the hard decision to put your beloved pet down because of financial concerns?
Sadly, these are the options that tens of thousands of pet parents in the U.S. must consider if they do not carry pet insurance. In many ways, pet insurance is worth it just for your peace of mind.
So, is pet insurance worth it?
To help you answer that question for yourself, here are a few important factors to keep in mind before making that personal decision.
IT'S ABOUT COVERAGE FOR THE UNEXPECTED, NOT ROUTINE CHECK-UPS
You might not actually want a policy that only covers your routine trips to the vet. It sounds bizarre, but these types of policies carry higher premiums and you may find yourself spending more on the policy than for the actual vet bills.
If you are considering coverage for routine veterinary visits for your pet, then a “Wellness Care” or preventative care policy, which many pet insurance companies offer, might work for you. Some insurance providers offer the coverage as a separate policy while others combine it in their comprehensive coverage plan.
This policy type only covers the following services: annual exams, routine visits, vaccinations. It does not cover illnesses or accidents. However, some policies will cover some of the yearly tests and treatments of your pets. These tests include heartworm and parasite detection, as well as deworming. Some provider plans also cover microchip insertion and grooming services.
Preventative care for your pets sounds like the smart choice, but we recommend you do the math first to see if it is worth it for you to purchase the coverage for your pet. Factors such as where you live, and the age and breed of your pet should be considered in determining your choice.
We do know that the tipping point to break even in most cases is $500 in annual preventative care.
CAN YOU AFFORD PET CARE IF DISASTER STRIKES?
If you're a pet owner who sees your pet as a part of the family and you don’t want to choose between a $5,000 vet bill and putting down your pet, then pet insurance is probably a good choice.
As pets age, it becomes much more likely that expensive surgery or ongoing medical treatment for a chronic condition will come up. Pet insurance can soften the financial blow by allowing you to do what's right for your pet, the same as you would for another family member.
Therefore, the best time for you to purchase pet insurance is when your pet is young and healthy. You’ll not only save on premiums, but you will have coverage for your pet before a chronic illness develops or an injury occurs.
Keep in mind that most providers do not cover pre-existing conditions or will not insure your pet if it already suffers from a chronic condition or previous injury.
Pet insurance can range from $10 to $100 per month, with the average policy costing about $50 per month. Is it worth it? Let’s say your dog becomes diabetic. Monthly insulin injections costs anywhere from $20 to $90 and that doesn’t include office visits or other treatments.
According to PetPlan, you will pay between $800 and $1,500 for unexpected veterinary care. And more than one-third of pet owners lacks the savings to cover this kind of significant out-of-pocket expense.
RESEARCH PET INSURANCE BEFORE YOU BUY
We recommend that you understand the following factors before you make a decision on purchasing pet insurance for your family pet.
Coverage
There are three types of pet insurance coverage, including:
- Accident Only – covers the cost of veterinarian treatment in case of an accidental injury but will not cover the cost of treatment of disease or an illness
- Comprehensive – covers accidents, illnesses, and preventative care
- Wellness Plans – covers routine visits, vaccinations, and some annual tests
Benefits
There are four types of benefit limits, including:
- Unlimited Lifetime (recommended) – once you pay your deductible, there are no caps on what a provider will pay to cover your vet’s bills
- Annual Maximum – a provider sets a cap on how much it will cover each year
- Annual Per Incident – this is the maximum amount a provider will cover per year for a particular procedure, illness, or medical condition
- Lifetime Maximum – this is the maximum amount a provider will cover over the lifetime of your pet in total or for a specific condition
Deductibles and Reimbursements
Deductibles: this is the amount you will pay before your provider begins to cover expenses. As with other types of insurance, you determine the deductible amount, and the higher the deductible, the lower your premiums.
Reimbursement: this is the percentage of a vet bill that the pet insurance provider will pay. Similar to deductibles, you can choose the percentage for your pet’s plan.
Pricing
Pricing is determined by a number of variables including where you live, your pet’s breed and age, your deductible amount and reimbursement percentage.
DON'T DELAY. PRE-EXISTING CONDITIONS ARE NEVER COVERED
Most pet insurance companies will not cover a pre-existing condition.
Think of it this way, if you crashed your car when it was uninsured and then signed up for insurance, would you expect them to pay?
We don't think so. Don't delay in getting a quote.
BOTTOM LINE
Pet medical bills are expensive.
If you have a pet, you need to know your options and be prepared, should the unexpected strike.
Whether that means getting pet insurance or not is a personal decision for every pet parent, but it is essential to know your options.