Logic Insurance, How Pet Insurance Works - It is midnight and you are at the pet emergency hospital with your dog. It turns out he did break his back leg and it requires orthopedic surgery.
The surgery will cost $2,500 with hundreds of dollars in after care and physical therapy. Sound familiar or scary? That is why the pet insurance business is one of the fastest growing pet related industries.
How Pet Insurance Works
Pet insurance companies are not charity groups that seek to help you out in times of financial need. They are profitable businesses. The reason they are profitable is that they know the risk of a payout to pet owners is less than the money that they receive in total monthly premiums. They also know that the odds of your pet needing extensive care when they are young is so low that you will have paid more than enough in monthly premiums by the time they need to payout in the pet's later years. Why not take advantage of the same facts? Be your own insurance company and retain any unspent money.
Pet Savings Accounts
Quality pet insurance policies range from $35-75 per month depending on coverage and deductibles. Why not put that same amount in a savings account for your pet(s)? In one year the account would be worth $420-900. According to the American Veterinary Medical Association pet ownership statistics, the average household spends only $378 annually for dogs and $191 annually for cats in veterinary care. Your account would easily cover these expenses.
Over the life of your dog, the account would grow to ensure care in the pet's later years. If you considered yearly exams and vaccines as "a deductible" and paid them out of pocket instead of the account, especially during the early, healthy years of your pet, the account would even be larger in the later years.
Another way to protect your pet savings account in the early years is to consider the addition of a "catastrophic" pet insurance policy. These are less expensive than major policies and protect against a serious injury or disease. Eventually the policy can be dropped as the saving account grows.
Analysis of pet insurance policies in Consumer Reports agrees that self-insured pet plans are superior. The odds are in your favor that your pet savings account will have money left after your pet is deceased. You retain the money that would have been spent as monthly premiums and profits for the insurance companies. Feeding a quality diet and maximizing your pet's health will also minimize veterinary bills and increase the value of your pet savings account. (Dr. Ken Tudor)
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