Pet Insurance and its Alternatives: Compare Your Options

Nadav ShemerByNadav ShemerDec. 27, 2018
Pet Insurance Alternatives
Higher veterinary costs are leading to greater demand for pet insurance, but what are some of the other pet financing options and when should you consider them? What's your plan for when your pet needs the doctor or hospital? Understand the options available to you.

Fewer than 1% of American pets are insured, with most people choosing to self-fund their pets’ veterinary costs and medications, according to IBISWorld’s Pet Insurance in the US report. Yet vets are increasingly being trained in advanced procedures like CT scans, transplants, and radiation therapy, which is good news if you love your pet but bad news for your finances. The average surgical vet visit for a dog costs $474 and the average routine vet visit costs $257, according to the 2017-18 American Pet Products Association National Pet Owners Survey. Rising costs are turning pet insurance into an increasingly attractive option for consumers, but what are some of the alternatives and when should you consider them?

#1: Self-Funding

Many people fund their pets’ medical expenses out of their own pocket, either because they’re not aware of the insurance options or it simply hasn’t occurred to them to insure their pets. Self-funding veterinary costs is like self-funding your or your children’s medical costs. It may seem like a good decision when you’re healthy, but nobody is going to sell you affordable insurance after you get sick. 

You might want to self-fund if your pet is from a healthy breed and isn’t likely to find itself in risky situations. But if you do self-fund, it’s critical to have enough money saved up for your pet’s worst-case medical scenario. 

#2: Credit Financing

A pet credit card lets you spread veterinary costs out over a long period of time and get approved for financing before your pet needs a procedure. For example, Care Credit provides credit financing and is accepted by thousands of vets around the United States. It offers no-interest repayments for 6 to 18 months and extended repayments for 24-60 months with a 14.9% interest rate. 

Some vets offer their own payment plans, often with a lower interest rate than a credit card. One word of warning about financing: unlike pet insurance, it won’t save you from having to pay the entire bill, and it can even cost you more in the long run due to accruing interest. 

You might want to get a pet credit card if you’d rather not pay for pet insurance each month but know you won’t be able to cover your pet’s medical bills in one payment.

#3: Create a Savings Account

Any American can deposit money into a medical savings account or health savings account to prepare for future medical expenses. The pet equivalent is a pet savings account. Many banks offer pet savings accounts, with minimum monthly transfers ranging from $5 to $50 and competitive interest rates to help you accrue savings. 

Some savings plans include membership in Pet Assure, which offers discounts on vet services and pet supplies. However, it can take several years to save up enough for a major veterinary procedure, and the unfortunate reality of any medical emergency is you never know when it will happen.

You might want to create a pet savings account if you’d prefer to take matters into your own hands and think you can accrue savings fast enough to insure you have the money you need when your pet needs it.

#4: Financial Assistance Programs

If you have no way of financing a pet’s medical care, several national organizations offer financial assistance in the form of grants or loans. Most states also have low-cost, volunteer-run vet clinics that provide things like emergency procedures and vaccinations at affordable prices. 

You might want to apply to a financial assistance program if your pet becomes sick and you can’t afford to pay for their medical expenses. Keep in mind, you may still have to pay something and it’s hard to predict how much or if you’ll qualify for discounts. 

When Should You Get Pet Insurance? 

For all their advantages, none of the alternatives listed above can cover you in the unfortunate event that your pet needs an expensive procedure. A CT scan costs around $800 on average, while an organ transplant could cost anywhere from $10,000 to $20,000. For most Americans, financing those types of costs out of their own pocket or with a credit card simply isn’t a viable option. 

The best pet insurance companies promise to reimburse 70%-90% of costs above a $100 to $500 deductible in return for a small monthly premium. For example, Pets Best offers accident-only cover with a $200 deductible and 80% reimbursement for $9 per month. Let’s say you receive a bill for $1,000 for an important procedure. Using our example, you would pay $360 out of your own pocket which, when added to 12 months of payments, equals $468 for the year. If you choose to self-fund, the $1,000 procedure will cost you $1,000. With credit financing, it will cost you even more than $1,000 in principal and interest over the life of your plan.

Of course, not every pet is the same, and everyone needs to do their own risk analysis when bringing a pet into their home. For example, Newfoundlands and Rottweilers typically incur more than $1,000 in medical fees each year (as well as higher insurance premiums), while other breeds carry less risk.

Pros and Cons of Pet Insurance

Pros
Cons

Choose your level of cover

Monthly premium

Low deductibles

Restrictions on pre-existing conditions

Free annual check-ups (with some plans)

Maximum benefit per year

The pet insurance market has become more competitive in recent years, with providers competing on price, types of coverage, and reputation. As a consumer, you have the freedom to compare pet insurance providers and choose the one that suits you. 

You can also lower your deductible by paying a higher monthly premium or lower your monthly payment by agreeing to a higher deductible. Most pet insurance plans include features such as free annual check-ups and bonus reimbursements. For example, if you’re forced to cancel a planned vacation due to a pet medical emergency, your insurer might cover some of the costs.

Just like your own medical insurance, it’s important to be aware that pet insurance providers do enforce certain restrictions. For example, older pets or pets with pre-existing conditions may carry a higher premium or be rejected for coverage altogether. And most insurance providers impose a cap on the amount you can claim for veterinary expenses in any given year.

So, is Pet Insurance The Best Choice for You? 

Bringing a pet into your home can be one of the most rewarding things you ever do. Whether it’s a dog, cat, rabbit, or exotic creature, your pet will become like any other member of your family: they’ll be with you in the good times, but they are just as capable of getting sick or injured as us humans. Vet costs are on the rise, and while this reflects improvements in the types of medical treatments available for our pets, it can also expose us to financial troubles. Fortunately, there are many ways to prepare for the possibility of high vet bills. Whether you opt for pet insurance or one of the alternatives, it’s important to do a quick cost-benefit analysis and calculate which option is most suitable for your and your pet’s needs.

Nadav ShemerByNadav ShemerDec. 24, 2018
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. He enjoys writing about the latest innovations in financial services and products.