Pet Insurance: 5 Steps to Choose The Best Plan

Takeaways

Pet insurance is a hedge against unseen and expensive veterinary bills.
Pet insurance primarily covers the costs of unexpected illnesses and injuries.
Pet insurance plans can help you budget effectively for your pet’s health care.
Pet insurance coverage falls into three buckets: accident, accident & illness, or comprehensive.
Pet savings accounts can be a great alternative to comprehensive pet insurance plans.

Some of the links in this article are from advertising partners of Smart Money, which does not influence our evaluations or recommendations. We work to provide you with accurate and reliable information. Our opinions are our own.

Choosing the right pet insurance plan for your furry friend is a crucial decision that can significantly impact your net worth and your pet’s health. Like any family member, your pet deserves the best care possible, and selecting an appropriate insurance plan is essential in ensuring they are protected. This guide will walk through the vital steps to consider when navigating the world of pet insurance.

There are many elements to consider when comparing pet insurance plans, such as evaluating coverage options, deductibles, total benefits, and premiums. You can also use customer reviews effectively to make an informed decision by sourcing tips and insights about the ins and outs of specific insurance programs, from the customer perspective. Whether you are a new pet owner or looking to switch insurance plans, this guide will provide the tools to choose the best insurance plan possible. Let's dive in and explore how to secure (at a reasonable cost) the peace of mind that comes with knowing your pet is well protected.

Smart Money -> 5 Amazing Smart Money Habits to Start Today

What is Pet Insurance?

In the simplest terms, pet insurance is a type of healthcare policy for your pet - dog, cat, iguana - that helps mitigate the financial impact of unexpected veterinary costs. Because pet healthcare can sometimes be quite expensive, especially in the case of emergencies or chronic conditions, pet insurance acts as a safety net to help cover those expenses.

It is important to remember that pet insurance is different from your health insurance in several ways. Most notably, pet insurance rarely covers pre-existing conditions and is designed primarily for unexpected illnesses and injuries. As a result, routine veterinary care like vaccinations, flea control, and spaying or neutering might not be covered unless you opt for a more comprehensive plan.

The purpose of pet insurance is straightforward: to help you afford the optimal level of healthcare or medical attention for your pet without the additional stress of large, unplanned veterinary bills. Pet insurance allows you to budget for those expenses by providing a safety net. With a great insurance plan, you can focus more on your pet's recovery and less on the financial implications tied to their recovery.

5 Steps to Choose Your Pet Insurance Plan

Below, we will dig into five key aspects to consider when choosing a pet insurance plan. These will help you ensure you are well-equipped to make an informed decision that benefits you and your pet.

1. Determine Your Insurance Coverage

When exploring the market for pet insurance, one of the most important things is to understand the scope of coverage you want. Coverage can vary significantly between plans, so it's critical to consider what types of incidents and care you want covered in your plan. Generally, pet insurance plans fall into three categories: accident-only, accident and illness, and comprehensive coverage.

Accident-only Plans: Accident-only plans are what the name suggests. These plans are usually the most affordable but only cover injuries from accidents. For example, if your dog is hit by a car or eats something harmful, accident-only plans would cover the bills.

Accident and Illness Plans: Accident and illness plans are a bit more comprehensive than accident-only plans. This extra breadth is more inclusive, covering accidents and a variety of illnesses, from common infections to rare diseases.
Comprehensive Plans: If you want the most coverage for your pet, consider a comprehensive pet insurance plan. These plans offer the most extensive coverage, including accidents, illnesses, and sometimes routine care and wellness procedures.

While comparing different plans, read the fine print and look closely at specific coverage details. Some plans might exclude hereditary conditions, behavioral treatments, or ailments specific to certain breeds. Always check for limitations or exclusions that could affect your pet.

2. Analyze Plan Deductibles

A deductible is the amount you pay out-of-pocket before your insurance kicks in. Understanding how deductibles work in pet insurance plans is crucial for making an informed decision. Typically, pet insurance deductibles are annual or per-incident.

Annual deductibles require you to pay a set amount each policy year towards covered expenses before the insurance company starts paying. Once you meet this deductible, your insurance will cover a portion of subsequent veterinary bills for the rest of the policy year.
Per-incident deductibles, on the other hand, apply every time you file a claim for a new incident, which can quickly add up if your pet has multiple health issues in a year.

For example, let’s say you have a comprehensive plan for your beloved cat. Unfortunately, your cat has had an accident and needs paw surgery, which the vet says will cost $1,000. Luckily, your plan has an annual deductible limit of $200. For a $1,000 surgery, you will only pay $200 for your annual deductible (to meet your plan limit), and pet insurance will cover the remaining $800 balance.

3. Account for Total Benefits

The total benefits of a pet insurance plan determine the maximum amount the insurer will pay out. This can be structured in several ways: per incident, annually, or over the lifetime of your pet. Understanding these limits is crucial, as they significantly impact the value of the plan.

Per incident limits cap the amount the insurer will pay for each illness or injury.
Annual limits set a maximum amount the insurer will pay in a policy year.
Lifetime limits are the total amount the insurer will pay out over the lifetime of your pet.

Plans with no annual or lifetime limits are often more expensive, but they provide greater peace of mind, especially for pets with chronic conditions or multiple health issues. A plan with higher total benefits might be more expensive upfront but can save you significant money in the long run, especially if faced with substantial veterinary expenses.

4. Review Plan Premiums

Your plan premium is the amount you pay, usually monthly, for your pet insurance policy. This expense varies based on several factors, including pet age, breed, health history, and where you live. Additionally, the coverage level, deductible choice, and benefit limits you select will influence your premium. Premiums for dogs can run between $26.51 and $277.45 per month, while cat coverage runs between $11.76 and roughly $90 per month¹.

Selecting the plan with the lowest premium can be tempting, but it's important to balance cost with coverage. A cheaper plan might save you money in the short term but could offer less comprehensive coverage or have higher deductibles, leading to higher out-of-pocket expenses later. On the other hand, more expensive plans often provide broader coverage and higher benefit limits, reducing potential future costs.

5. Consult User Reviews

Pet lovers can be fanatics and will usually tell you what they think about specific pet insurance plans by leaving reviews on company websites or message boards. Leveraging reviews can provide real-world insights into how different insurance plans perform in the real world.

Look for reviews from other pet owners to understand their experiences with claims processing, customer service, and overall satisfaction with the insurance company. Reviews can be incredibly helpful and offer nuggets of knowledge you might not have received elsewhere.

However, it is important to remember that people are more likely to share negative experiences than positive ones. Try to find a balanced view by reading a mix of positive, neutral, and negative reviews.

Alternatives to Pet Insurance

While pet insurance is a popular option for managing veterinary expenses, it's not the only one. One alternative to pet insurance is to get a pet savings account. With a pet savings account you set aside money specifically for your animal’s healthcare needs. This approach can be particularly beneficial if your pet is generally healthy or if you prefer more control over your money.

Pet Savings Account

The advantage of a pet savings account is its simplicity and flexibility. You decide how much to save and can use the funds for any pet-related expenses, without restrictions or waiting for reimbursements. However, the challenge lies in ensuring you budget and save enough to cover potentially large veterinary bills, which can be unpredictable and expensive.

You can also use a high-yield savings account to help generate interest on your savings and grow savings over time. Your savings will compound and increase during times when you don’t need any funds to help your pet.

Smart Summary

The right pet insurance can give you peace of mind and protect your budget from unexpected veterinary expenses. It is a smart money habit to take the time to research and compare different plans.

Consider your animal’s specific health needs, your financial goals, and the level of coverage you are comfortable with. The aim is to ensure that when your pet needs medical attention, the focus can be on their recovery, not how you will manage the costs. Getting pet insurance is a smart money move to hedge against unforeseen expenses.

Sources

(1) U.S. News. How Much is Health Insurance? Last Accessed November 14, 2023.