Pet Insurance Could Be a Bad Buy. You May Want to Get It Anyway

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  • Some research suggests pet insurance can cost more than it's worth.
  • A pet's age and health could play a role in whether coverage pays off. 
  • Pet owners may still want to get covered even if doing so isn't the best buy, as it's impossible to tell whether a pet will end up with expensive health problems.

If you're thinking about buying pet insurance, you may want to consider these issues. 

Pet insurance provides coverage for companion animals in case they get sick or hurt. Most pet insurance policies cover only illnesses and injuries, not wellness care (unless a special add-on policy is purchased). And many policies exclude pre-existing conditions, so insurance usually needs to be bought when an animal is young and healthy in order to provide the most comprehensive coverage.

While many financial experts recommend pet insurance to avoid putting costly vet bills on credit cards, some recent research suggests paying for the insurance doesn't always pay off. According to the nonprofit Consumers Checkbook, pet insurance premiums usually increase as animals age and they rarely pay off unless an animal needs major care. 

For example, for a mixed-breed dog who lived almost 13 years and who required moderate care, an owner could end up spending anywhere from $4,263 to $36,386 more on insurance than without it. By contrast, for the same dog who needed lots of care, having coverage would save an owner between $1,215 and $31,261. And cat owners also would spend more on premiums than they get back in most cases.

Despite this data, owners may want to buy coverage anyway. Here are two reasons why. 

It's impossible to tell which pet will require lots of care

The biggest reason why owners should buy pet insurance even if it doesn't pay in the end is because no one can tell which animal will require costly care.

Many people view insurance as a waste of money if they don't get benefits from it. For example, term life insurance is seen as a waste if the death benefit doesn't pay out or pet insurance is seen as a waste if it doesn't end up paying for expensive care.

But this is the wrong attitude to take. Policyholders are insuring against the risk of uncertainty. Obviously, the hope should be that the policyholder doesn't die or the pet doesn't get sick. But since there's no way to see the future, it's best to pay for protection against the dreaded what if scenario.

The insurance premiums paid for pet insurance buy the peace of mind of knowing that if an animal gets sick or hurt, that pet can get the necessary care. There's a value to this that goes far beyond the actual dollars the insurance policy pays out.  

Pet insurance ensures there's money there when it's needed 

Another huge reason to get pet insurance is because it is a predictable cost rather than an unpredictable one. If animal owners pay premiums that they can afford each month, money will be there when an unexpected expense comes up that they might not be able to afford at that moment.

While a pet owner could theoretically self-insure by saving the amount of the premiums in a pet health fund each month, many people don't do that -- and thus won't necessarily have the funds when disaster strikes. It's easier to make predictable payments as a monthly or annual habit, and then insurance is there with the cash when needed.

For each of these two reasons, pet owners should seriously think about getting covered ASAP even if it's not necessarily the best financial deal to do so. 

Our Research Expert

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