Pet insurance monthly payments: worth it?

Question:

I got a quote for my pet and it would cost me $30 per month for pet insurance.  Would I be better off saving $30 per month instead of buying pet health insurance for my pet?

Answer:

Only if you’re pet is very lucky and you are a diligent saver. Certainly if you can afford unexpected pet expenses a savings account can be a good approach. But there are four scenarios where a savings account is not the answer:

  • Something happens to your pet before you save enough. It will take five years if you save that same $30 per month to accumulate $1,800 plus interest of approximately $200. While insurance will provide you with $2,500, $7,000 or $14,000 per occurrence almost immediately for an unexpected accident (3 day waiting period) or illness (14 day waiting period).
  • More than one accident or illness occurs with your pet. The old adage of things happen in “threes” would quickly deplete a substantial savings account; while insurance provides for multiple medical events.
  • You spend the money on something else. This is quite common where we use savings for other expenditures.
  • Savings may not be near enough to provide funds you need. While insurance that pays 80% after the deductible provides you with nearly 5 times the spendable leverage. In other words a $1,480 savings or out of pocket funds will pay for $7,000 of coverage with a $100 deductible pet insurance plan. $7,000 pet medical expense, less $100 deductible, with 80% coverage results in the insurance paying $5,520 and you paying $100 deductible plus $1,380 (20%) or $1,480.

So unless you and your pet are very lucky, insurance makes sense. If you do the math, a pet savings account only works if your pet has no medical events or you save for years before your pet has a serious medical condition.