Savings account versus pet insurance
By Kim Campbell Thornton
April 1, 2008
Usually Gina and I are on the same page, but I have to disagree with her on pet insurance. I think it’s better to put the money that would go toward premiums into an interest-bearing savings account, or perhaps a “lockbox” as certain politicians have suggested.
Over the past dozen years, I’ve had five dogs and three cats (not all at the same time, thankfully). During that period, I faced two catastrophic pet health problems. My greyhound had bone cancer. The resulting amputation and chemotherapy cost $5,000 to $6,000.
That would have been partially covered if we’d had pet health insurance, unless there had been an exclusion for age. Savanna was 10.5 years old when she had her surgery. If we’d been saving the amount of the premiums for the previous seven years (I’m estimating $39 per month per pet, which is on the lower end of the scale of the premiums I’ve seen for various plans), we would have had more than enough to cover the cost of her care without having to worry about exclusions or deductibles.
Ten years after Savanna’s death, one of our Cavaliers started going downhill from mitral valve disease, which is endemic in the breed. In the six months we had left with her, we spent approximately $10,000. None of that would have been covered by health insurance because MVD is one of the breed-specific conditions that’s excluded by many pet health insurance companies.
But let’s say that I’d been saving that $39 per month per pet (we’ll say four pets, since I didn’t have all of them throughout the entire period) during that 10 years. I’d have had $18, 720 to cover Darcy’s expenses. That’s not counting any interest earned and compounded during that time. My math’s not good enough to figure that out. And I could have been putting some of that money toward other pet health expenses that usually aren’t covered by insurance, such as teeth cleaning.
Do I follow my own advice? No. Both times, I relied on credit cards. I’m fortunate to have good credit, and I didn’t hesitate to whip the card out as needed. We cut back elsewhere. No exotic trips. No meals out, except for the occasional visit to Del Taco. No trips home for the holidays.
We did have pet health insurance for a while, years ago, when we were much younger and poorer. We used it once; it covered $200 or $300 for surgery our cat needed to have a lump removed. That was nice, but Shelby went on to live to be 19 years old with few if any health problems until extreme old age. Continuing pet insurance on her would have been dollars down the drain.
In my experience (YMMV), catastrophic pet health problems aren’t an annual event. For people who have the discipline for a savings account or the wherewithal to use credit cards, I think those are a better choice than pet insurance. Or, get a bird. I don’t think Larry’s vet bills have totaled more than $200 over the past 20 years. That’s, hmm, let me see, $10 a year…
Thanks, Kim!
(And that’s Ilario, a/k/a Larry, five weeks, I put in there for ya!)
Comment by Gina Spadafori — April 1, 2008 @ 5:02 pm
I’m with you Kim. On Gina’s thread I pointed out that everyone needs an emergency fund and not just for pets. I recognize that some people can barely make ends meet as it is, but for those with any amount of disposable income - a free low balance money market or savings account is a good way to go. Direct deposit a set amount (even if its only $20 a paycheck) and you won’t even miss it.
So take the money you would spend on a latte at Starbucks and put it away. Cause not only could your pet need expensive medical care, but the muffler may fall out of your car or as in my most recent experience, the dishwasher may decide that your kitchen floor needs a good washing as well. A really good washing.
Gina: My very first ‘real’ boyfriend’s name was Larry and he was a red head as well. I hope your Larry is as sweet and good natured as mine was!
Comment by 2CatMom — April 1, 2008 @ 6:22 pm
I’m with Kim also. Lindsey was completely healthy until the pet food recall and now he’s on $60/month meds — since I’m a saver, I’ve got not one, but two “emergency funds” (one a money market with my local bank and one a high-interest Internet bank savings account) so I was able to pull the money when I needed it to save Lindsey’s life and to keep him on the meds that are keeping him alive and happy (he doesn’t know he’s not really healthy anymore since his meds and grain-free diet are working).
If I could find a high-deductable catastrophic pet insurance policy that would cover any pet (as I’m sure my next pets will also come from rescue and I don’t want to be limited on their age) with a “well-pet exam” from a vet I trust, I would probably do it for Pepper (who will be 6 in July) or for any new pets we add to the household. I really only would want pet insurance to cushion the blow of something nasty and unexpected — I don’t need it for basic care.
As I’m not seeing those policies for the pets I have — or probably would want to have in the future, I’m just adding a little extra to the emergency funds — and making a note to do some surfing on interest rates for long-term CDs/money markets/savings accounts to make my money work harder in this economic downturn.
For myself and for what I’m seeing out there in pet insurance policies, I think I’m going to do better for my pets — and the rest of my family — by making sure my money is getting the best possible interest rates than by pouring over pet insurance policies. YMMV
Comment by Dorene — April 1, 2008 @ 6:49 pm
I’m with 2CatMom. These insurers may work for others, but for those of us with older animals and adult rescues of unknown history, they seem less than ideal.
I’m also very uncomfortable with the idea that if I don’t follow my vet’s advice on “preventative” healthcare, I may be setting myself up for insurance problems down the road. After all, I do not vaccinate my animals, do not use heartworm meds, I feed raw, and I use a homeopath - all things that my vet disagrees with, but respects my choices. To have to do the dance with an insurance company in a time of stress (sick/injured animal) over why I made the choices I did does not appeal.
Having an emergency fund set aside and a credit card in good standing is a far better choice for me right now.
Comment by mikken — April 1, 2008 @ 6:51 pm
Wow, there sure has been lots of discussion about pet insurance on Pet Connection today. When it rains, it pours.
@Dorene: High-deductible pet insurance is available, my company offers it with a $500 annual deductible, which of course keeps premiums very affordable. I’ll leave it up to you if you want to follow up for more info.
@Kim: Your Cav’s MVD would have been covered with our company. Again, things are changing, there are a small number of pet insurance companies that cover breed-specific diseases.
But weighing in on the debate in general, I don’t think anyone disagrees that savings plans have their place. But the utility of a savings plan is a function of how long you pay into it, your fiscal discipline, the interest rate on the account, and the type of veterinary care your pet might need if you have to dig into the account.
For example, if you start putting $20/mo into a savings account @ 2.50% interest, after 5 years you’ll have just over $1,200. Meanwhile, veterinary prices will have increased by about 40% on average (according to the BLS, veterinary fee inflation in metro areas is around 7%/yr). So in reality a savings account at 2.5% interest is actually decreasing in value by about 4.5% per year. (the econ geeks can compare nominal rates to real ones)
Our claims data tells us that, on average, insured pet owners/parents/guardians (Gina, I’ll let you pick which one you like best :)) claim around once every three years or so. So that’s the timeframe I’d be using when comparing a savings account to pet insurance.
Personally I think the right combination is a savings account for all of the day-to-day stuff combined with a high-deductible pet insurance plan (cost: depends, perhaps $12 - 20/month) for the really expensive stuff. Kim is right, catastrophic is not an annual event, but you also can’t predict when catastrophic is going to happen. Catastrophic can strike at any time.
Insurance works well when it’s for unexpected, expensive stuff. Too many times pet parents are thinking about the $100 minor ear infection and overlooking the possibility of a $2,500 visit to the vet ER.
At the end of the day, to put a Jeopardy spin on things, there is no one right answer to the question “How should I prepare financially for my pet’s health needs?” But we each need a *real* plan to handle the *possibility* of a $2,000+ expense.
Comment by Alex from Embrace — April 1, 2008 @ 8:30 pm
I am a pet owner, and not affiliated with any insurer. This article is factually incorrect (most glaringly this comment “None of that would have been covered by health insurance because MVD is one of the breed-specific conditions that’s excluded by many pet health insurance companies.”) and I would suggest anyone interested in knowing about pet insurance do a bit of research on the plans currently available.
I would start researching at petinsurancereview.com
I ended up with PetPlan USA, covering 3 dogs for a total of $700 per year. It has a $200 deductible per indident, no co-pay unless it is an emergency vet or referral vet, and $20,000 per year coverage. No sublimits and no exclusion for genetic conditions.
I am fairly responsible with my money, and don’t need to set up pretend savings accounts to cover special events such as a pet illness, I would do so from regular savings. I would simply feel a bit of conflict spending thousands of dollars per year on an exceptional or chronic condition on one or all of my pets, and insurance removes one source of conflict.
The new pet insurance plans are so much improved from the days of VPI. I read a few pet blogs and never have read a quality discussion on the financial aspects of pet insurance. Insurance is not meant to cover routine events, it is to cover extraordinary situations. Ideally, most owners will not benefit from it financially. Those who do will be grateful.
Comment by Erich Riesenberg — April 2, 2008 @ 3:28 am
I’m a savings account kind of girl, myself. And yes, I’ve had considerable vet bills at times- I spent close to $3000 last year on Luce’s knee. Right now I’m looking at a neurologist visit +/- CT scan for the 11 year old dog I adopted a year ago. I’ve already spent hundreds on him in bloodwork, not to mention what it cost to have his eye enucleated in November.
But these past two years have not been the norm, and I’m careful with my money, despite not having a lot of it, so I’ve been able to pay for what has needed to be done.
Comment by katie — April 2, 2008 @ 4:17 am
I arrived in the US and researched every insurance avilable at the time. The two I didn’t take up were pet and dental, and I reviewed 3 pet plans and two dental.
They seemed to have the same problems: 1) you have to pay up front so you need to have the money to spend the money and 2) even assuming my dog gets a fairly serious issue the differential between the fees and the treatment cost is quite low (if he doesn;t it’s a money pit). My research into veterinary costs (an industry I am involved in) suggests that there is a fairly narrow band of people who can afford the insurance and paying up front and would not otherwise be able to afford treatment (for a car accident, cancers etc)—and those who can afford to save their own money and use that.
For me the emergency fund works much better, and if the dog doesn’t get ill I keep the money ;)
Comment by emily — April 2, 2008 @ 6:49 am
Alex - my $20/mo was a hypothetical minimum. I actually put away $100/paycheck x 26 paychecks = $2600/yr. I do have other savings/investment accounts, but I like having an account that is never touched unless its an emergency. And trust me, every few years there is one (the dishwasher ended up having to be replaced, a broken pair of glasses a few weeks ago set me back almost $700).
And for those looking for a good place to get a low balance, low cost savings or money market account (and some of the best CD rates around) I highly recommend E-trade bank (and no, I don’t work for them).
Comment by 2CatMom — April 2, 2008 @ 7:29 am
Insurance companies + sales people = bottomfeeders! They will tell you you’re wrong, you’re bad, you’re stupid to intimidate you into improving their profit margin.
Sorry, sales people, I despise nasty tactics.
Comment by Roberto — April 2, 2008 @ 9:17 am
Both insurance articles are well done and though-provoking.
I have PetCare (Canada) insurance on my two dogs, both of whom were insured relatively early in life.
At the time the dogs were insured, there weren’t as many options in Canada. Vetinsurance (U.S. only at the time) looked interesting because there was no per-category maximum. When I did the calculations last night, now that my dogs are both older, it would be prohibitively expensive.
My two cats are not insured. The youngest cat, at 10, would not have been able to get a policy with the value we needed last year when she was treated for cancer and hyperthyroidism.
Insurance on the dogs gives me some peace of mind, but my strategy (like others here that are credit card addicts) is to move over to the savings approach. Insurance was appropriate under the circumstances at the time.
Comment by shibadiva — April 2, 2008 @ 10:14 am
I completely agree with you on the savings account… but how terrible to say that birds are cheap pets! Parrots (including budgies, cockatiels, and lovebirds) require yearly vet checkups, with at least every other year bloodwork that runs into the hundreds of dollars. Emergencies run into the thousands almost immediately. I have spent more money on one single parrot than I have my three large dogs combined.
Finches and canaries may be less expensive on vet bills but they, too, still need vet exams regularly and vet care when they’re ill.
I spend an enormous amount of my time trying to educate people about parrot care, and it’s hard when others say ‘oh, birds are cheap pets’. It’s worse when professional animal care people say so. Even worse when it’s on the blog shared with someone who wrote a book about bird care!
Comment by Stephanie — April 2, 2008 @ 11:25 am
Co-wrote. With the world’s best avian vet, Dr. Brian Speer.
And yes, it’s true: Birds can be very expensive to care for and treat. But, they can also be “cheap” to keep if you know what you’re doing and invest in good food (a variety of good, fresh “real” food), good husbandry, especially with regard to cleanliness, annual or even more frequent veterinary wellness checks with diagnostics and lots of environmental enrichment, bonding and exercise.
I’ve had one “cheap” parrot — a “free” Senegal surrendered to a vet after the owner couldn’t deal with the bird’s many health problems. Patrick would have cost me a fortune in vet bills, had I not been writing “Birds For Dummies” with Dr. Speer at the time and got great care at a discount. (Now, I pay like everyone else.)
Patrick died at Dr. Speer’s after struggling through many health issues.
Eddie, my caique, has had all the advantages of great nutrition and good husbandry, and hasn’t needed anything more than an annual wellness exam and husbandry review with Dr. Speer, complete with diagnostics.
Well, except for Dr. Speer helping me through Eddie’s coming of age hormonal issues and the parrot’s jealous rages over any other male of any other species hanging around with “his mate.”
It’s true: I was in an abusive relationship with a bird not even as big as my hand. But we worked through the issues, and we’re OK now. :)
Comment by Gina Spadafori — April 2, 2008 @ 11:42 am
Hi Gina!
I know you co-wrote the book, I’ve got a copy. :) It’s a great resource, and one I regularly recommend.
My comment here was specifically that no one who is spending less than $10 a year on a bird is getting regular veterinary exams (which, at minimum, would cost at least $30 - $50 for an exam), and the implication that because of that, birds are great pets for people who don’t want to spend money on vet bills.
Maybe you or Kim could write a future blog on exactly how expensive and how important vet care is for parrots particularly?
Comment by Stephanie — April 2, 2008 @ 12:29 pm
The picture of Ilario is a
“WOW”
Comment by Colorado Transplant — April 2, 2008 @ 2:56 pm
I got a new dog in December. He was only 16 months old and high deductible pet insurance was very reasonable and seemed like it was more likely than a savings account to cover any emergencies. For my other dog, cat and bunny, a savings account makes more sense. I think it’s a choice best made on a case by case basis.
Comment by Juli — April 2, 2008 @ 8:26 pm
Ideally, I would drather have a savings account.
The hassle with another insurance company besides the ones I already have would drive me up a wall.
I did not get any money from my insurance company when a girl hit my car and drove off, even though I got the registration number.
The homeowner’s policy did not pay for the water leaks. The insurance company found a way out of that.
I could go on and on—and that is why a savings account makes sense to me. I cannot deal with the exclusions, the denials, the limitations, and combativeness of yet another insurance company.
Comment by Colorado Transplant — April 2, 2008 @ 9:15 pm
I was insured with Vetinsurance for only one month before I was told that my dog of 9 years had Cancer. The stress of the ordeal was helped, knowing that I had insurance for her. Unfortunately, I had no choice but to say goodbye to her. The professionalism and compassion that Vetinsurance showed was unmatched to any other company I’ve dealt with. They paid my claim, showed sincere compassion and sent a condolence card within 1 week. How refreshing is it to have a company out there that does what they promise.
Comment by Scott — April 3, 2008 @ 8:09 am
A lot of the decision making process on whether to get insurance or have an emergency fund savings account(yes, we have one) is based on past experience with our pets. Most of us don’t think anything catastrophic will happen to us, let alone our pets. Unfortunately we had a Lab who got cancer at 6 and it cost us $6K for his treatment. We had no pet insurance at the time. Subsequent pets had enough minor things happen that having insurance for them would have also made sense. We have recently gotten a Lab mix pup from our local shelter and with our history, knew pet insurance was going to be researched. After researching the options, decided on Trupanion. They specialize in insuring puppies and kittens up to a year old for their lifetime. They fit our needs since our pup was only 9 months old. We like the fact that we don’t have to worry about premiums going up as our pup ages or if he has any claims history. So for us, we’re more comfortable with putting a little less in our emergency savings and knowing our dog is covered “when” something expensive happens.
Comment by carpe diem — April 3, 2008 @ 8:43 am
18 years ago when we brought our yellow lab Honey into our family, we did not even know about pet insurance. 10+ years later Honey experienced several health issues, and we were face with either paying expensive vet bills or not treating Honey’s various health issues. If we had it to do over again we would have bought pet insurance when she was a puppy. I recently entered into a business relationship with Trupanion, which insures puppies and kittens. Trupanion is an ethical company which any pet owner should examine.
Comment by jflare — April 3, 2008 @ 8:59 am
HI everyone,
There are definitely some interesting points being brought up in this blog. Keep em rolling! I will start off by saying that I am territory partners with a pet insurance company called Trupanion (Vetinsurance in Canada). I have worked in the veterinary industry for years and have heard “you’re better off just having a savings account, rather than investing in pet insurance” numerous times. I understand the frustrations that pet owners have faced over the years with pet insurance. High deductibles, changes to coverage…… we have been trying to “break the mold”, so to speak. I know what you’re all thinking, “sure, sure, insurance companies are all in it for the money”. I am passionate about what I do because I know that what I’m doing is helping thousands of pets and pet owners. I have my own three pets insured and have only had to use the insurance for my one dog ‘Titan”. That’s what the insurance is for. I hope I never have to use it, but I’m sure glad I have it in case I do!! In regards to a savings account, it sounds great in theory, but realistically it would take over 8 yrs just to save up $3000 (at $~30 per month) and think of all of the interest you’ll be paying over those 8 years! Trupanion has lifetime coverage of $20 000 (no limits per year or illness or accident). You can use that $20 000 for all accidents and illnesses that occur over your pet’s lifetime. We only enrol puppies/kittens from 8wks to 1yr of age. This reduces the chance of there being any pre-existing conditions, therefore anything would be covered (yes, including congenital and hereditary disorders). I know an “honest insurance company” sounds like an oxymoron…. check it out. We may be new to the States but we’ve been in Canada as Vetinsuracne for 8yrs and you can read our reviews at http://www.petinsurancereview.com.
Comment by KB — April 3, 2008 @ 9:26 am
So that means Trupanion is of no use to anyone adopting an adult pet?
Also, when will it be available in all areas of the United States?
Comment by The OTHER Pat — April 3, 2008 @ 9:51 am
That is correct Pat, at this time we are only enrolling puppies and kittens. The reason why we chose to go this route is because our biggest disappointment over the past 8yrs has been having to deny claims based on pre-existing conditions. We don’t want to deny claims……. period.
There are a number or companies that enroll older pets…….
Pets Best
VPI
Embrace
PetCare
Petplan
Pet Assure
Hartville/ASPCA
Trupanion certainly cannot make every pet owner happy but we can continue to have the best value and coverage for all puppy and kitten owners.
We’re currently liscenced to sell to the majority of pet owners in the United States…. where do you live?
Comment by KB — April 3, 2008 @ 10:06 am
Hi there. Very interseting comments, I also am a Trupanion/Vetinsurance territory Rep in SW Ontario, Canada.
I think the idea of a savings account is a good idea, but having that money sitting in an account is a very real tempation to be used to fund something else. I’ve heard this same idea put forward before, but very few people have the discipline to do it in the first place, in fact after talking to a number of clinic staff, etc, I know of no one who has. Having a good quality insurance policy is the best for most people, especially if they enroll the pets when they are young, before things have had a chance to occur and then be pre-existing.
I have 4 pets insured with Vetinsurance, I pay the same rates as everyone else, and i have had to make a claim on 3 of those 4, so far. And I am not treated any differently than anyone else either, I assure you! Each time we have had our claims processed efficiently and without fuss and this is true for many others in my area who have made claims. Not seeing a rates increase, or drop in co-insurance, or any change in policy due to age of the pet or number of claims made is a real eye-opener.
I am passionate about pets and am more than pleased to be a part of an organisation with a difference, who treats everyone with honesty and integrity and has a very real impact in the lives of people and their pets. Check us out, you’ll be pleased at what you see.
To The Other Pat who wrote above,the age limit for Trupanion is 8 weeks to 1 year. Vetinsurance in Canada will take pets up to age 12.
check out the website at http://www.trupanion.com
Comment by TB — April 3, 2008 @ 10:28 am
I should not have been flippant about birds being inexpensive pets, and I apologize. We’ve been very fortunate that Larry hasn’t had any health issues and that his vet gave him a clean bill of health—sorry, couldn’t resist—at his checkup last year.
Comment by Kim — April 4, 2008 @ 3:51 pm
Hello…
Great blog on the importance and benefits of having pet insurance. I am a Territor Partner for Trupanion in California. While we have not gone live in California yet, I have had the opportunity to talk to several veterinarians and pet owners about pet insurance. What they like most about Trupanion is that it is so easy to understand. It truly is PET INSURANCE MADE EASY. Trupanion will pay 90% of all claims and provide $20,000 in lifetime coverage. Furthermore, pet parents are never penalized due to a pet aging or making claims. This is a company really gets it!!
Comment by KM — April 6, 2008 @ 7:15 pm
Hi,i am new to Canada,and i brought with my my pets..i didn t have time to make an insurance,and my cat had a litlle problem in urinating..sand,cristals.i took it to the vet ,cost me 400cad,he made the urinanalisys,the x ray..it is ok now,eats only c/d.if i ll go for insurance,will they pay if i need a surgery..i hope not,but it is 8,and i am scared.the surgical intervention is the only think that i am worry..cos i don t have money..nor credit history so strong to go ask for banks,so the insurance is what i need now.is this problem one of the pre existing cond.i am sorry about my english..here for 5 months only.thank you
Comment by alina — May 1, 2008 @ 3:26 pm
Alina, unfortunately, you won’t find any insurance willing to pay for care related to a pre-existing condition. You should be able to get insurance that will cover accidents and other illnesses.
Comment by Lis — May 2, 2008 @ 3:37 am
Alina, this page lists some organizations that offer financial assistance for those struggling to meet veterinary expenses:
http://felinediabetes.com/vetbills.htm
I’m not sure how many of them are available in Canada, but hopefully this will give you a start.
Good luck with your little one!
Comment by The OTHER Pat — May 2, 2008 @ 5:31 am