young brunette woman holding a white fluffy cat while paying bills

Pet Insurance vs. Savings–Managing the Costs of Vet Care

When it comes to pet insurance, perhaps the most common question pet parents ask is, “Is it worth it?” Many people argue that it’s better to put money into your savings each month rather than purchasing pet insurance.

Certainly, both options have their sets of benefits and drawbacks, but which option truly is the best for you and your four-legged friend?

Pet Insurance vs. Savings Account

There are many items to consider before deciding on either the pet insurance or savings account option.

The Benefits of Pet Insurance

Signing your pet up for insurance can be a rewarding decision that could save you hundreds or even thousands of dollars over the course of just a few years.

Before selecting an insurance provider or an insurance plan, be sure to read over each provider’s specific guidelines and exemptions. It’s equally important to be aware of any waiting periods and know exactly what is and isn’t covered on your plan.

It comes as no surprise that one of the most common questions pet parents ask concerning pet insurance is, “What’s the average cost of pet insurance?” Since the price of insurance can vary, there is no direct answer to that question. Keep in mind, items that can affect your pet insurance premium can include the breed of your pet, their age, if they have any preexisting conditions, and if you are covering multiple pets. Not to mention, the price can also change based on the specific insurance plan that you choose. Conveniently, insurance providers often allow you to get a free insurance quote before selecting a plan.

Although many pet parents feel prepared to pay for routine care for their cat or dog, it is often the fear of high, unexpected costs that motivate families to sign up for insurance. Having your pet covered with insurance can provide peace of mind. When you have coverage, choosing treatment for your pet can be less stressful—instead of worrying about prices, you can focus on getting your pet the best care.

Pet insurance companies are also known to offer the benefit of customization to items such as your annual limit, reimbursement percentage, and deductible. By selecting a custom plan based on your and your pet’s needs, you may be able to stretch your dollar even further.

Pet insurance can also be more cost-effective than being without coverage.

Here’s an example of how:

Say you have a pet insurance plan for your dog, and it costs you $40 a month. Over the course of a year, which is how long our plan periods last, you’d pay $480.

Now, say your dog swallows a foreign object, something we frequently receive claims for, and it results in a vet bill of $3,151.73, which is the average of what our customers have paid for the incident.* With pet insurance, you can get 90% of your covered vet bill back once your annual deductible is met. So if you had an annual deductible of $100, you’d get $2,746.56 back on your claim for the foreign object incident.

If you had just set aside $40 a month for vet care instead of spending it on pet insurance, you would’ve ended up with $480 in savings after a year, but it would’ve all been spent on that one bill for foreign object removal, and you’d still have to pay another $2,671.73 out-of-pocket. Imagine if your pet had another expensive incident that year.

These would be your total out-of-pocket expenses:

Overall, pet insurance can help reduce financial strain, but there are a few things pet owners should keep in mind before signing up for a plan.

What to Keep in Mind

Here are five items to keep in mind if you are considering pet insurance.

  1. Enrolling your four-legged family member in insurance can be a practical, financial choice, but it can also be a sentimental one. Not only can insurance provide financial assistance with veterinarian bills, but it can also provide reassurance for countless families.
  2. All pet parents should keep in mind that the cost of insurance for a pet could increase with age. Although not all providers will have higher costs for older pets, many choose to raise the monthly rate because older pets are, more often than not, more expensive to care for.
  3. Pet insurance can also be viewed as risk management. Most pet parents worry about the “what-ifs”—“What if my dog breaks their leg?” “What if my cat needs emergency surgery?” “What if I can’t afford treatment?” Although you may go a few months without submitting a single claim, when an expensive bill does arise, you will surely be thankful and have peace of mind that your pet insurance could help cover the cost.
  4. An alternative to regular coverage is an accident-only plan. Keep in mind that these plans do not cover as many items as other plans. Still, an accident-only option typically means a lower monthly premium and little to no premium increase as your pet becomes older. For some families, an accident-only plan is a perfect compromise—it provides help at a lower cost.
  5. Pet insurance works differently than human insurance. With pet insurance, you pay the entire veterinary bill and then submit a covered claim. After your claim is processed, then your provider will reimburse you the appropriate percentage.

To help make pet insurance worth your money, make sure to choose an appropriate plan based on your pet’s needs. For instance, if you have a dog breed that is notorious for developing multiple health issues, then you may want a plan that covers higher bills. On the other hand, if you have a cat whose breed is known to be extremely healthy, then an accident-only plan could be an option to consider.

woman in a blue striped shirt checking her bank account while two small dogs rest next to her on a couch

The Benefits of a Savings Account

Many pet parents believe creating a pet savings account is a more sensible option than pet health insurance. If you choose to save your money (instead of signing up for insurance), you will not have to worry about any monthly fee. Instead, you can put that money towards your savings.

A wonderful benefit of having a pet savings account is that you can control how much money goes into the account. For instance, you could create a plan to put aside $50 from every paycheck, or you could add $200 every month. If it’s Christmas time and you receive some extra cash, then you could stock away a little extra that month, or if you have a month with multiple high bills, then you could choose to put a little less in your pet’s account that month.

Another great thing about pet savings accounts is that you can begin saving money as early as you would like. Let’s say you are a college sophomore and plan to adopt a cat right after you graduate. Even though you won’t be meeting your new family member for another two years, it means that you still have two years to save money.

Having a specific savings account set aside purposely for your pet can help you think more actively about allocating money just for that account. Not to mention, by being able to see the exact amount you have saved, you can better plan your budget for new toys or special treats for your four-legged friend.

What to Keep in Mind

If you are considering creating a savings account for pet-related expenses, here are five things to keep in mind:

  1. Accidents and illnesses are typically unpredictable. So, you may discover that it is difficult to judge how much money you should be putting in your pet’s savings each month. Not to mention, one major surgery could wipe out all that you had saved. Keeping this in mind, it is typically a safer bet to save a little more money each month than you may think necessary.
  2. Everyone has a different saving style. Some people prefer to set aside money every week, and some prefer to set aside money just once a month. You probably are already aware of your own money habits and know whether you are naturally a saver or spender. If you are a pet parent that loves to splurge on gifts for your pet, you may need to cut back a little and instead place that money in your savings. Some pet parents even recommend looking at your entire budget to see where you can pull from for more money. Money-savings options could include getting take-out food less often and making coffee at home.
  3. It would be best if you remain diligent and consistent with putting money into your savings. Even if your pet does not have any accidents or illnesses for months, you should continue to save. Without insurance, in the instance that your pet needs emergency surgery, you could owe anywhere from a couple hundred up to a few thousand dollars after just one veterinary visit or one procedure.
  4. To help save money, it may be worth your time to shop around and compare veterinarian prices. Not only is it beneficial to have your pet’s primary veterinarian be an affordable one, but in the case of an emergency, this means you will already have a medical professional (that you can afford) lined up.
  5. Even for non-medical related expenses, such as food, litter, and toy costs, it can be valuable to find great deals. By buying your regular supplies at a store that offers coupons or rewards for returning customers, you will be able to put your saved money towards your pet’s savings account.

Many pet parents may choose to use a pet savings account for the first year of having their pet, then decide to sign their dog or cat up for insurance. Understandably so, families often prefer the added financial security of pet insurance. No matter which option you find to be the best fit for you and your pet, all pet parents can at least agree that a healthy pet is a happy pet.

*Internal Claims Data, January 2016-September 2017