Is Pet Insurance Worth It?

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SAN JOSE, California, August 24, 2021 / PRNewswire / – For over a year, most of us have had a parcel more time in our homes to prevent the spread of COVID-19[female[feminine. So what do you do to add a little “spice” to the monotony that naturally sets in after a long period of shelter in place?

In the case of our family, we had puppy fever … bad. And I couldn’t be happier to say that we were able to welcome our sweet and furry new family member a few months ago. But statistics show that our family was far from the only one who decided to acquire a new pet during the pandemic. The following are tips for those who have purchased a pet this year and are considering pet insurance, from myFICO.

For more information on loans and credit, visit the myFICO blog at https://www.myfico.com/credit-education/blog

In June 2021, the American Pet Products Association (APPA) published its National Pet Owner Survey. The survey found that the number of pet owners has increased from 67% to 70% since its last release. And more than 25% of new pet owners said their decision to add a new pet was directly influenced by the pandemic.

The study also found that purchases of pet insurance increased during the pandemic and almost double for cat owners. Of course, this tendency to purchase pet insurance adds to the overall cost of dog ownership or cat. Is it worth it? Let’s take a look at how pet insurance plans work to see if they might be right for you financially.

How much can it cost to visit your pet’s vet

Veterinary expenses are generally divided into two categories: routine care and emergency care. Routine care is generally less expensive. The APPA indicates that the average annual costs of routine veterinary visits are:

However, routine veterinary care is usually higher in the first year of an animal’s life. According to CareCredit, here’s how much dog and cat owners pay on average in first-year vet fees:

  • Big dog: $ 2,008
  • Medium dog: $ 1,779
  • Little dog: $ 1,471
  • Cat: $ 1,174

If your pet needs complex or emergency veterinary care, costs can skyrocket quickly. Here are the average costs of some of the costliest complex conditions based on Pets Best claims data from: january 2017May 2020:

State

Dogs

Cats

Cancer

$ 4,137

$ 3,282

Foreign body in the stomach

$ 3,262

$ 2,955

Diabetes

$ 2,892

$ 1,634

Broken bone

$ 2,371

$ 2,257

Heart murmur

$ 1,140

$ 1,440

And how often do these expensive vet visits take place? PetPlan says its claims data shows that every six seconds a pet owner receives a vet bill for more than $ 1,000.

While this statistic may sound scary (and it’s designed to), it’s important to understand that there are approximately 184 million dogs and cats in the United States according to the latest data. So this means that your chances of facing an expense of more than $ 1,000 in any given year are actually less than 3%.

Average cost of pet insurance

Before evaluating the average costs of pet insurance, it’s important to note that virtually all of the companies in this space only offer coverage for dogs and cats. If you own a cat or dog, you will generally be able to purchase two types of coverage: Accident Only (AO) or Accident and Sickness (A&I).

Depending on the insurer, you may also have the option of purchasing an accident, health and welfare insurance policy. Or you might be able to add a Wellness Coverage Rider to your AO or A&I plan. Each year the North American Pet Health Insurance Association (NAPHIA) publishes average premium data for cover types AO and A&I. Here’s what owners paid for pet insurance in 2020:


Accident only (AO)

Accident and sickness (A&I)

Cat

Monthly: $ 18.17

Annual: $ 218.13

Monthly: $ 28.48

Annual: $ 341.81

Dog

Monthly: $ 11.13

Annual: $ 133.61

Monthly: $ 49.51

Annual: $ 594.15

Whether you pay less or more than these averages will often depend on the age and breed of your pet. Insurers typically charge higher premiums for older dogs and breeds prone to expensive illnesses to treat.

The deductible you choose should also have an impact on your premiums, but probably to a lesser extent. Most insurers offer deductibles as low as $ 100. Maximum deductibles can vary widely from insurance company to insurance company. $ 500 to end $ 2,000.

Common Pet Insurance Terms and Limits

When you compare pet insurance policies, monthly premiums are obviously important. But there are a few more details you’ll want to pay attention to as well. These include:

  • Repayment rate: Even after you reach your deductible, your pet insurance company will generally only reimburse your covered expenses up to a certain percentage. These generally vary from 70 to 90%. While lower reimbursement rates are likely to lower your premiums, you will also have higher reimbursable costs when you make a claim.
  • Payment limits: Many pet insurers have annual and lifetime payment limits. However, some don’t have either, so you’ll need to educate yourself on this during the purchase process.
  • Franchise options: The more a pet insurer offers you options for deductibles, the more flexibility you will have to find the premium that suits your budget. Also note that some pet insurance companies offer decreasing deductibles which decrease with each year that you do not make a claim.
  • Covered conditions: This is perhaps the most important factor, but it is also the one that is most likely to vary according to each insurer. Carefully read the list of conditions covered and not covered by each company. It is very unlikely that you will find a plan that covers pre-existing conditions. However, coverage for congenital and hereditary illnesses will vary by carrier.
  • Waiting times: Most insurers have a waiting period of 14 to 30 days after purchasing the policy before the majority of accidents and illnesses can be claimed. But the wait time could be much longer (often 6 to 12 months) for some expensive conditions such as cruciate ligaments, disc disease and hip dysplasia.

Finally, you’ll want to assess the insurer’s claims and payment process. Most pet insurance companies will require you to pay for your vet visit on your own and then apply for reimbursement. However, direct payment from the veterinarian is possible with some insurers.

Best Pet Insurance Alternatives

If you’re not sure which pet insurance is right for you, it’s always a good idea to start putting money into a pet emergency fund each month. For example, let’s say you registered 25 $ per month ($ 300/year). In this case, you would save enough to cover the average costs of routine care (after the first year).

In addition, you would save a little more each year which would add up over time. Even just having $ 500 hiding will reduce the shock to your bank account if your pet needs veterinary care for an accident or illness on the road. Or if you later decide to purchase pet insurance, setting up a pet emergency fund could give you the option of choosing a higher deductible.

If you decide to forgo pet insurance and later face veterinary expenses that you can’t afford out of pocket, you still have options. The Humane Society maintains a list pet financial aid resources.

You can also ask your veterinary clinic if payment plans are available. Otherwise, you can request it from a third-party finance company such as CareCredit or Scratchpay. Just be aware that your eligibility and the interest rate you receive will depend on your credit history. Check your credit reports and FICO® score on myFICO.

Is Pet Insurance Worth It?

Like everything insurance companies, pet insurers are not trying to waste money. They wouldn’t offer these plans if they didn’t believe that, overall, they will receive more in premiums than they pay in veterinary care reimbursements.

But that doesn’t mean pet insurance isn’t worth it. It is clear that some conditions can cost thousands of dollars to treat. And accidents that require extended stays at the vet (like if your pet has been hit by a vehicle) could cost even more. If you want peace of mind and still be able to provide your pet with the medical care they need, purchasing a pet insurance policy could be a great decision.

If you do decide to purchase pet insurance, it’s probably a good idea to start your policy when your pet is young and premiums are most affordable. Plus, it could help you keep your pet insured for the long term. Even when insurers have age restrictions, they often promise to never give up coverage for pets that were on a policy before reaching the age limit.

Finally, be sure to shop around. Carefully review premiums, reimbursement rates, and coverage limits with several insurers before making a decision. Or you can use a pet insurance market like Pawlicy Advisor Where PetInsuranceQuotes.com to compare the plans of several insurers at the same time.

About myFICO
myFICO makes it easier to understand your credit with FICO® Scores, credit reports and alerts from the 3 bureaus. myFICO is the consumer division of FICO – get your FICO scores from the people who do the FICO scores. For more information visit https://www.myfico.com.

SOURCE myFICO

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