Should I Buy My Dog And Cat Health Insurance?

Ron Hines DVM PhD

Ask Yourself Three Questions To Make That Decision

Do I consider my pet a family member?
Would I spare no cost to keep him or her healthy as long as it is medically possible?
Would the costs of doing so cause me financial hardship or might I not be able to pay for it at all?”

Will Buying My Cat And Dog Health Insurance Save Me Money In The Long Run?

Probably not.

For the vast majority of pet owners a dog or cat health insurance policy will loose you money. What you will gain is peace of mind.

You need to understand something about the casualty insurance business to understand why you are quite unlikely to spend less on veterinary bills during your pet’s lifetime than what you would likely pay to the company in premiums.

All casualty insurance companies (that’s what pet health insurance polices are) survive and prosper by accurately understanding risk. They employ an army of actuaries to develop tables that tell them how likely it is that your cat or dog will be hit by a car. How likely it is to develop allergies, liver, kidney, heart or respiratory ailments and the like. They update those tables yearly or quarterly and they price their pet insurance polices accordingly to net them a profit (about 6-8% in 2020). If their actuaries are good, the vast majority of pet owners like you will receive less money from the pet insurance company over the lifetime of their pet than they paid to the company in monthly premiums.

In 2008, Nationwide Insurance purchased VPI pet insurance. In 2020 Nationwide claims to be America’s largest pet insurance provider. In 2020, Nationwide quotes monthly premium costs as being between $26 and $60 per month for most dog breeds. I am guessing that if you purchase a trendy breed known for its multiple genetically based health issues – such as bulldogs, your premiums will be considerably higher (read here)  or that the common health issues found in those breeds will be deemed “not covered pre-existing conditions”. Read about some of those genetically-based problems here. Cat insurance is quoted as being between $13 and $46. However, the older your pet is when you first apply, the higher those yearly payments will have to be. An option used by other pet insurance companies is to increase your rates from year to year as your pet gets older. 

All other factors that their actuaries determine as influencing your pet’s risk of becoming ill and you likelihood of placing a claim influence what you pay and what is covered. If the Company’s actuary department is not good at what they do and claims exceed premiums the Company will go out of business. Even your zip code will factor into what you are likely to be quoted in premiums. 

I cannot tell you specifically what the odds are that you will receive more money from your pet insurance company than you paid them over the years. These companies do not release that sort of information. But looking over the statistics of other casualty insurance such as fire, I will venture a guess that about 1 in 20 pet owners who buy pet health insurance for their dog or cat will come out financially ahead or break even.

Its just good business for all pet insurance companies to promote and advertise the 1 in 100 client who hit a financial jackpot: The pet owner whose dog needed a $12,000 portosystemic shunt ligation  soon after the owner bought a policy, the cat that needs an $18,000 kidney transplant , the Cavalier King Charles Spaniel that needs Dr. Uechi,’s $30,000 heart valve replacement.  If those clients were the rule rather than the rare exception (or if those problems were not deemed uncovered as a pre-existing conditions) those pet insurance companies would be out of business in a short time. 

So What Am I Buying And Why Am I Buying It?

As I mentioned, when you buy pet health insurance you are buying it for peace of mind. You are trading a smaller monthly dollar cost that you can afford for the peace of mind of knowing that you will never face veterinary bills that are a hardship or dollar amounts you cannot afford to pay. Buying pet health insurance is both an economic and an emotional decision. 

Much like a lottery ticket, you pool your pet’s risk with a very large group of pet owners with similar concerns knowing that only a few of your pool will face very large veterinary bills. You can instantly turn a persistent fear of expensive veterinary bills into a known, manageable monthly cost. 

Consumer Reports believes that putting a couple of hundred dollars into a household emergency health account fund each year to pay for serious pet health issues is a wiser choice than purchasing pet health insurance. For the great majority of us, other than those that strike the insurance jackpot, they are right. But be realistic, how many of us are going to open a health savings account for our cat or our dog?

Why Is The Market For Dog And Cat Health Insurance In The United States Growing?

During the time I have been a veterinarian the perception of many Americans as to what a household dog or house cat is has changed. When I began my career, dogs and cats were regarded as property. You could love them, you could spoil them, you could talk to them – but the law and society granted them no special status, no inalienable rights. That was also a time when veterinarians could not offer your pet complicated and very expensive treatments when your pet became ill. Today, human family sizes are smaller. Relatives live far apart. The interpersonal support systems of small-town America are gone or crumbling and religion plays a smaller role in the lives of many of us. Dogs and cats have obligingly rushed in to fill that void. Many Americans now see pets as “non-human beings” – an integral part of the human experience rather than property or chattel. Many people with these deep feeling for the particular “non-humans” they love pose the question: “If the rest of our family has health insurance, why should my Fido and Felix be left out”?

How Many American Dogs And Cats Currently Have Health Insurance?

Estimates in 2020 range from 1-3% of the approximately 90 million pet dogs and 95 million pet cats in the United States. (read here) In Europe and the UK, considerably more dog and cat owners purchase pet health insurance. Agria of Stockholm, Sweden is the largest insurance company providing it. In 2019, 90% of Swedish dog had health insurance, in the UK in 2020, 23%. (read here) The Agria Company is also more accepting of sharing their actuary and statistical data with veterinarians and the public than those doing business in North America. (read here, here & here)

If I Buy Pet Health Insurance Will My Dog Or Cat Have A Longer Life?

Perhaps.

If purchasing pet health insurance motivates you to take your cat or dog to your veterinarians as soon as you are suspicious that something is not right, yes – you might catch a health issue while it is still more treatable or curable.

If down the road, your pet faces a curable health issue that you could not afford to have performed without insurance, yes. One 2017 NAPHIA  study found that the owners of dog and cat health insurance policies paid 29% more on veterinary care for their dog and 81% more on veterinary care for their cats than pet owners who had no insurance. 

But just like us, Nature dealt your dog and cat genetic cards before birth that predestine and predispose much that occurs during its life. Pet health insurance does nothing to change that. ( read here )  Many of those genetic cards are breed and lifestyle specific and at the current time, no amount of money, insurance or veterinary treatments can change that. Gene editing is in its infancy. When those sophisticated techniques reach veterinary medicine, your options might change.

If length of life in an animal companion is important to you, select your pet from health stock and choose a breed known for longer life. What will also help modify those genetic cards is not an insurance policy, it is a healthy diet and a lifestyle for your dog or cat than minimizes risk.  Don’t allow your dog or cat to be neutered as an infant. It shortens life and predisposes your pet to a host of disabling diseases. ( read here ) Don’t allow veterinarians to over-vaccinate your dog or cat. ( read here ) Feed your pet a quality diet with the same quality ingredients that you eat. (read here)

What Should I Be Looking For In A Pet Health Insurance Plan?

I would be looking for a plan that is most liberal in covering the costs of catastrophic illness – not routine veterinary care. I would not price shop. I would stay with companies that have a broad, positive reputation in the insurance industry in general. Among those companies there will be a small difference in policy costs for similar or identical coverage. That often reflects how successful the company has been in investing your premium dollars. Its not just profit margin on their pet insurance that generates their income; there success in investing the money you send them plays an important part in that too. For example, it was said that Warren Buffett formed the Berkshire Hathaway Insurance Co. primarily to accumulate capital to invest in the stock market. I do not know if that is true. But for him, and for GEICO, it was a wise move. Others insurance companies might be adding pet health insurance as a new product line and offering it at a discounted introductory rate. They know that they will probably have to raise your rates in the future – but they hope their strategy will help them penetrate the market and, perhaps, hang on to your dog or cat policy even when their rates go up to national averages. The problem with discount shopping is that in the long run, if an insurance  company continues to be overly generous in paying pet-owner claims, the will eventually run out of money reserves to make those payments.

What Questions Should I Ask The Pet Health Insurance Agent?

Just as if you were buying a health policy for yourself, do not expect the pre-existing health issues of your pet to be covered. At least not for the first 3-12 months. Risk and premiums go up with lifestyle. An indoor cat’s policy might be less expensive than one for a cat that roams the street. Your pet’s age will also be a big factor in determining the cost of the policy. Do not lie or bend the truth. Because certain breeds are significantly more likely to develop genetically based health issues, be prepared to pay more or receive less coverage when your pet’s breed falls into their higher risk category. Ask the agent about both those factors and how they will affect the cost of its insurance or limit its coverage. Ask the agent if there is a deductible and the amount. I suggest the highest deductible you can afford if you want to keep the insurance premium cost down. Ask the agent what the caps are for treatment. Write them down and ask your veterinarian if those dollar amounts seem reasonable. Find out how the company will determine your pets current health. Will they rely on your veterinarian’s records? Will they require a pre-insurance physical exam? Ask what percentage of the total veterinary bill they will reimburse you for once you deductible has been met. Again, ask about caps. Ask about their policy regarding chronic and recurring health issues. Ask if prescription drug costs are covered. Ask if veterinary prescription diets are considered covered medications (they rarely are). As if there are any geographical or other limitations on your free choice of veterinary establishments that you choose for your pet. Specifically inquire about coverage for cancer, kidney, heart and liver failure and arthritis diagnosis and treatment. They are the leading health issues faced by older pets. Ask how frequently your insurance premium costs will be raised as your pet ages and what those increased premium amounts will be. I went through the Nationwide application process this morning. The agent would not answer many of these questions. What he suggested was that I give him my credit card information, they would bill me the first two month policy costs for my 10 yr old dog Maxx ($450.40) if I was approved and he would pass the questions on to the group that approves or disapproves polices. If they did not agree to insure him, they would not bill the card. For only $502.14 (both pets), he would throw in coverage for my 8-year old cat, Oreo. Cat owners traditionally visit veterinarians less frequently.

Do Veterinarians And The AVMA Like Pet Health Insurance?

Yes, for now most do. The AVMA sees pet insurance in a narrow, materialistic way – as a method to potential increase revenues for veterinarians. However there are veterinarians who worry that with time, these forms of insurance will lead to managed care in which veterinarians are forced to negotiate prices and treatment plans with the insurance companies themselves – much like what is occurring in the human health care industry. Veterinarians in other countries ponder the same issues. 

I see pet insurance as positive because it not only lowers worry and stress for you the pet owner; it lowering stress and worry among us veterinarians. The biggest stressors in your veterinarian’s life today are interactions with dissatisfied clients over unexpected bills and/or treatment outcomes as well as your veterinarian’s worry over his/her student debt burden. A runner up is pet euthanasia dictated by a pet owners inability to afford treatment. 

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