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Why Buy Pet Insurance?

To protect against unexpected financial decisions related to your pet’s health

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Living Hand To Paw by SuperFantastic on Flickr

Living Hand To Paw

by SuperFantastic on Flickr
Guest Author Laura Bennett FSA CFA, co-founder of Embrace Pet Insurance, says that she "never used to be the kind of person that buys pet insurance." What changed her mind, and why did she go on to start a pet insurance company? See what she has to say about pet insurance, pet savings accounts and huge vet bills in this article.

From Laura:
I never used to be the kind of person that buys pet insurance.

First of all, I'd never heard of it before some friends spent $5,000 on their sick cat and asked the question "why didn't we get pet insurance?"

Second, I grew up in a house with multiple pets and a very pragmatic mother. We looked after the cats, dogs, guinea pigs, rabbits, gerbils, fish, and birds as best we could, but when they got sick beyond our means (and that pretty much was anything halfway serious), they went off to the vet and didn't come back (except for the fish - they never made it beyond the toilet bowl). We were all heartbroken at our pets' departures but didn't think there were any other options; at the time, there weren't.

I bought my first pet insurance policy in 2003 when I was researching setting up a pet insurance company. I had two cats, Simon and Barnes, so I bought a policy for each cat from two different companies just to see how they operated. I really didn't think I'd need them, after all, the cats didn't go anywhere and had always been healthy. As short while later, my husband and I found ourselves with no household income and I considered dropping the pet insurance policies to conserve our dwindling cash, but a niggling thought of "what would happen if..." stopped me from canceling them.

As it turned out, just a few months later Barnes became suddenly very ill and was diagnosed with chronic kidney disease. I thanked my lucky stars I still had that policy as $1,200 flew out the door in 2 short days ($900 covered by pet insurance). I am not sure what we would have done without the insurance; I shudder to think about it.

My point is that most people don't think they need insurance because pet insurance pays for things that haven't happened yet. And worst, it seems like you might never need the insurance, or at least, not for a very long time if you have a young pet. You can't buy it after you need it, just like you can't buy car insurance after you've totaled your car. But as they say, life happens, high vet bills do pop up unexpectedly, and then what?

When someone asks me should they buy pet insurance, I ask that person at what point would you balk at a high vet bill? $500? $1500? $5000? What if the bill came in $500 chunks - when would you cut it off? Would you pay $8,000 to extend your dog's life for a year at age 5? Ouch! These things happen. If you are like me, you'd be very uncomfortable with the thought of cutting off treatment at some point if the care was productively helping your pet's health.

So what about setting up a pet savings account? I'm all for it! But in conjunction with a solid insurance plan. I know I can't afford to take a hit from a large vet bill (and what if that wasn't the end of it?) and I don't want to take the chance that I'd have to weigh my pet's health with my credit card balance.

My personal preference is for a high coverage pet insurance policy with a high deductible, which keeps the premiums down but protects me against big bills. I put aside funds to cover the medical care below the deductible along with my low copay, and I let the insurance protect me for the rest. Having said that, many people want to take much more of the financial risk of vet bills out of their hands and choose a much higher coverage policy, albeit for a higher premium. No one policy fits us all.

And finally, as if my own experience wasn't enough to get me to buy pet insurance, I'm especially motivated by the claims that come in to our claims department. We see 37% of pets claim for an accident or illness every year and of those that claim, one third have a claim over $500. It's kind of like working in the ER department to put you off riding a motorcycle. You won't catch me without a pet insurance policy ever again!

What do you think about pet insurance for your pets? Do you consider yourself as taking a financial risk if you don't have pet insurance? Seeking your opinions: Is pet insurance worth the expense?

Disclosure: Laura Bennett FSA CFA is the co-founder of Embrace Pet Insurance company.

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