I don’t think you can know whether pet insurance is worth it or not until after the fact. What I mean is when you take out pet insurance you don’t know how often you’ll need it. But after 10 years of having it you will be able to decide whether you have saved money or not. So, for example, if your cat was unexpectedly very ill over a long period of time and the insurance company had to pay out the outcome might be positive for the cat owner and negative for the insurance company. The insurance company stack the odds in their favour with carefully constructed policies.
On the other hand if you live with a very healthy cat but are risk averse and take out an insurance policy over many years but never use it, the insurance company will like you as a customer. They will make money out of you.
If you don’t have the money in savings to pay for a big veterinary bill and you are a concerned cat or dog owner and you have the ability to pay insurance premiums you should seriously consider taking out pet insurance until you have sufficient savings then you can go over to self-insurance.
Predicting health outcomes
The problem is you can’t predict. That’s not quite right because you can predict, for example, whether a Persian cat will get polycystic kidney disease (PKD). We know that about 35 percent of Persian cats do get it and therefore you can work out the maths and stats. If you’ve got a Persian cat she should be insured. The problem here is that the insurance companies know all the statistics regarding purebred cat health and they know that a Persian cat might get this disease therefore you will pay higher premiums.
Insurance companies are in it for profit
We have to remind ourselves that the pet insurance companies are in the business of making money. That is obvious but it needs to be stated because they will use all the algorithms and statistical manipulations they can to ensure that they arrive at a profit. Therefore, across the board taking into account every cat and dog owner in any country, the customers lose out on pet insurance. Yes, the customer is the loser if you ball them altogether. It has to be like that otherwise insurance for pets would not exist.
Winners and losers
But within the cohort of cat and dog owners in any country there will be winners and losers with respect to pet insurance. You want to be one of the winners and that is down largely to luck. It’s about risk and reward. Ultimately pet insurance is about peace of mind. If you think that your companion animal might be sick but not sure how sick then pet insurance might be for you.
You can certainly stack the odds a little bit in your favour. For example, during the coronavirus lockdown there was a surge in dog adoptions. Some people were scammed with inflated prices. A lot of these dogs were probably unhealthy because they were bred in puppy farms in Eastern Europe. The purchaser has no idea. These dogs are not infrequently sick. Therefore, if I was buying a dog from a pet shop I would get the dog insured although the insurance companies would probably ask a question about where you acquired the dog and put up the premium if they knew you bought the dog from a pet shop.
It is hard to beat the insurance companies which is what you have to do to be in net profit with insurance payments over many years.
Read the policy
An important aspect of pet insurance is to read in its entirety the terms and conditions (boring I know). For example, you will have to pay the veterinarian and then be reimbursed by the insurance company. They do not cover upfront costs. This is a normal situation.
Also, pet insurance does not cover routine “proactive” veterinary care such as vaccines and checkups or dental cleanings. Some providers offer wellness plans which reimburse a set amount for vaccines and other pet maintenance services.
I think pet insurance policies are complicated and therefore if you need help in understanding them you should ask questions. Ask questions of the company providing the insurance and do your online research.
Payouts, deductibles and premiums are all very important when selecting a pet insurance policy. The premium will have been carefully worked out by the company and is dependent upon factors such as your companion animal’s age and whether they are purebred or random bread, whether they are spayed or neutered and where you live.
The deductible is what you have to pay out of the cost of veterinary care. The higher the deductible the lower your premium, in general.
The payout is what it says on the tin. It’s what the pet insurance company pays you to reimburse you. It might be low at 80 percent, mid-range on 90 percent or high at a 100 percent. The higher the payout percentage the higher the annual premium. The insurance company will probably cap the payout to a maximum on a yearly basis. You might be allowed to choose the limit. The higher the limit, the higher the premium, probably.
Deductibles vary from company to company. The deductible may be on a per visit basis which is the worst option. There means you will pay a certain amount of the veterinarian’s fees every time you make a claim for treatment. Alternatively you might pay one deductible in any calendar year for the same condition. So if you take your dog to the veterinarian for the same health problem four times in one year you pay one deductible and all future care is covered.
Alternatively you may pay an annual deductible and once you reach that deductible the rest of the treatment for the year is paid by the company.
Read the insurance policy carefully because some illnesses and treatments are not covered. If you are unclear ask questions. Major illnesses such as cancer or hip dysplasia may be excluded. The insurance company may add a little surcharge to cover cancer for example.
Young companion animals
It is said that pet insurance is ideal for younger cat because insurance is the cheapest and kittens can get into trouble because of their boisterous nature and their habit of eating anything on the floor such as string which can become entangled in their gut. These are just examples.
Old companion animals
For older cats, insurance is less cost-effective because the premiums go up and you have to disclose pre-existing conditions. If your elderly cat has been healthy throughout his life then the premiums might not be too high and the peace of mind it brings to you in your cat’s autumn years may be worth the cost.
There are more purebred dogs than purebred cats. By and large purebred companion animals live shorter lives than random bread ones because inherited genetic illnesses are always a problem or a potential problem. This puts up premiums. The insurance company know the issues. They know which diseases are linked to which purebred dog or cat. You should be careful to make sure that the insurance company does not exclude inherited diseases for any one particular breed.
The reputation of the insurance companies varies. You need to signup with insurance company who are known to have at least a certain amount of integrity and who will not wriggle out of making payments when required to do so under the terms of the policy. So ask around. Ask your veterinarian friends and family what they think. Reputation counts with respect to insurance companies.
Alternative way forward
If peace of mind is important to you and you are risk averse, an alternative way to proceed would be to set up your own insurance. Rather than paying money into an insurance company where you have to pay all their overheads and in some cases high salaries, you could put away a certain amount annually, say about $400 or the equivalent in British pounds into a savings account and then call upon that as and when you need to.
Risk and peace of mind
The big point to make about pet insurance is that it is about risk and peace of mind. You may think that the peace of mind is worth the money. And if you have the money then you should probably do it. You won’t know whether on a purely financial basis taking out pet insurance will work out over the lifetime of your cat or dog. That’s the risk. Having no insurance is also a risk because you may have bad luck if your cat or dog may be seriously ill costing you many thousands of pounds. It really is a personal thing as to whether you take it out or not.
I don’t insure my cat because I prefer to do my own insurance if you like. At the moment it’s working out because he is healthy. He is almost 6 years of age and has never been to the veterinarian for an illness. Touch wood. I don’t know what the future holds but I have the savings to pay out a large sum if I have to. I prefer to do it that way.