Health insurance, for my dog?

Would you spare no expense for the health and life of your dog? For me, as long as the treatment wouldn't put my dog through too much pain and discomfort. Do you have a savings account you could dip into for a huge vet bill? Uh, what savings? Would you have to put that bill on a credit card for which it would take years to pay off? Yep, that's me.

Almost two years ago I bought pet insurance for Sampson and Daisy. I read articles, went over my budget, reviewed insurance plans, and calculated how much I'd have in a few years if I put the premium amount into a dedicated savings account instead. I discovered that there were two types of pet insurance: old-style plans that pay off a Schedule of Benefits and reset every year and new-style plans that are designed for life-long coverage and cover a greater amount of claims. You'll pay more in premiums though. Here, I share with you my findings.

Savings account or not

I ended up with monthly premiums of $20 and $25, respectively for Daisy and Sampson (Sampson's older, so slightly higher premium). That $45 per month fit my budget and gave me peace of mind. Let's say I put that $45/month into a savings account, in 4 years I'd have a little over $2000 and in 10 years I'd have over $5000. These amounts would be somewhat higher than this because of interest in the savings account and the fact that the premiums would go up as the dogs age, but it's a ballpark figure. In 4 years, that $2000 would not be enough to cover a major surgery for one dog. And in 10 years, that $5000 would not be enough to cover, say, a cancer treatment, let alone all the other incidents and illnesses that may come up for two dogs in 10 years. And what about discipline? Would you continue to contribute dutifully to the account and not dip into it for other needs?

The bottomless pit of credit card debt

I'm not going to elaborate on this one much - it's a no brainer. Putting a $4,000 or more vet bill on a credit card would cost you an astronomical amount to pay off on a credit card due to the high interest, not to mention years to pay.

Choosing a pet insurance plan

As with your own health insurance, there are vast differences in pet insurance plans. Here's a guide to understanding them and what to look for - and look out for - in finding long-term, major accident and illness coverage.

Routine care
Coverage for routine care, like vaccinations and checkups, was too costly with every plan I researched. Meaning you'll pay more for the coverage of routine care than you would for the care on your own.

Reasonable and customary charges
Rule out any company (such as VPI) that pays claims based on a Schedule of Benefits, which is basically a list of how much they pay maximum for a condition, test, etc. Typically these are much lower than actual vet charges. So the insurer says that they pay 80%, but only up to the Schedule of Benefits amount. Look for companies paying out claims based on "reasonable and customary charges" just like your own HMO or PPO. I don't think pet insurance is worthwhile with companies using a Schedule of Benefits. The portion of the claim paid is too low, even though the premiums are low, to be worthwhile. You'd be better of with the savings account.

Reviews
Read reviews online and rule out companies that have really poor ratings. A quick Google search will yield some review sites. You can also check the Better Business Bureau ratings. Make sure the company appears reputable and has a good insurance underwriter. I'd also say to make sure the company has been in business a long time, but that may be difficult. Pet insurance is a relatively new and growing field. There may be excellent new players.

Ideal coverage
Customarily, pet insurance providers have excluded genetic and hereditary conditions. However, competition has caused some providers to rethink that and I was able to locate a couple that cover genetic and hereditary conditions. None that I found cover pre-existing conditions, so enroll while your dogs are still healthy. Know that when you enroll, they'll get all your vet records and exclude any pre-existing conditions or potentially pre-existing conditions. I was also able to locate a company that covered alternative therapies, which could be really beneficial for treatment of your pet.

Long-term illness, lifetime coverage
Make sure that a major illness continues to be covered for the life of your pet. Believe it or not, many companies "reset" the policies every year at renewal. That means coverage ends for any illnesses that previous plan year and they become pre-existing conditions that will never be covered again.

Premium cost
Monthly premiums vary, depending on the level of coverage. You'll pay more for more thorough coverage and reimbursement. You might also want to get an idea of how much the premiums will increase at renewal each year as your dog ages. You should get a discount for insuring multiple pets.

Coverage limits
Most plans have yearly and lifetime coverage limits, as well as incident limits. Make sure you understand them. Since I was looking for major accident or illness coverage, I wanted a high per incident limit or high yearly limit.

My choice

I chose PetPlan USA pet insurance, with their Bronze plan. It came to $45 a month for Sampson (age 4 at time of purchase) and Daisy (age 1 at time of purchase). PetPlan USA has a novel approach, allowing you to choose your plan and customize the coverage percentage (coinsurance) and deductible. They have a handy wizard for quoting premiums. I went with a higher, $200 deductible per incident or illness and 100% coverage - I pay nothing after the $200. The premiums go up quite a bit when I reduce the deductible, but since I was wanting coverage for major incidents, this was acceptable. I've found PetPlan's customer service to be excellent, with U.S.-based agents, and processing claims to be very timely. The claim form is simple and I get email alerts of claims received and processed.

In the almost two years I've had pet insurance, I've only had small claims, so I've only gone over the $200 deductible once. I'm confident that over the life of my two lovely dogs I'll have some big claims and be grateful for the pet insurance.

Vet clinic decisions

Another bonus, having the insurance makes decisions at the vet's office easier. Deciding on that expensive blood panel or procedure, knowing that the portion over the deductible will be covered, is a relief. Pet insurance may just give you peace of mind.