Despite public perception, veterinary services are a bargain compared to medical and dental services. Few medical and dental consumers are aware of what their providers bill their insurance company. Most consumers are only aware of their co-pay. Compared to the co-payments (instead of actual costs) for medical and dental services, veterinary services do seem overpriced. This perception has led to the popularity of pet insurance.
Certainly pet insurance is comforting when that unexpected hospitalization at the emergency clinic or fracture repair of the exuberant puppy occurs. However, being your own insurance company may be a more sound financial decision.
How Insurance Works
Insurance companies exist to make a profit, and there is nothing wrong with that. It is simply important to understand that they are not philanthropic organizations that give you money when you need it. You pay for it and in most cases you will pay far more than you ever receive. The business of insurance is to calculate the risk of eventual payouts versus the anticipated income of premiums and price their products accordingly. They only offer a service because the odds are in their favor to profit. You can use this same risk favorability to your own advantage and set up your own pet insurance account.
The Odds Are In Your Favor
Everyone has a pet horror story of getting a parvovirus infected puppy, a hit-by-car pet, a gastric bloat, or an emergency hospitalization for pancreatitis (I could go on). After 30 years in practice I can assure you that these represent a small portion of general practice. Most of our puppies and kittens mature with only minor problems and we see them for their yearly exams and triennial vaccinations (many veterinarians are still vaccinating annually) with few problems. Many of the expensive bite wounds, fractures, and diseases we see are avoidable with proper supervision or training, routine preventative care, and proper nutrition.
Just like children, the majority of pets grow-up without major health issues. As animals age and need to have lumps removed, more involved dental care, allergy management, cancer care, and care for degenerative orthopedic and spinal conditions, then veterinary service costs do become greater. But with your own pet health accounts you will be ready. The odds are in your favor!
The How-To on Pet Insurance
There are many pet insurance companies offering different levels of coverage at a variety of premiums. They can range from catastrophic injury or disease for only about $7 to $10 per month premiums, to more comprehensive coverage for $50 to $75 per month. Most of my clients with pet insurance pay about $35 to $60 per month for their intermediate coverage policies. If you can religiously pay an insurance company $50 a month, why not religiously pay yourself?
Open a puppy or kitty bank account for your pet(s) and make a monthly deposit, quarterly deposit, or semi-annual deposit. Yes, it requires self-discipline, but why let someone else profit due to the lack of it? At $50 per month there will be about $5,000 in the account (assumes yearly withdrawals for routine veterinary care) when your pet reaches 10 years of age. Owners of pets with high risk factors for disease (hip dysplasia, heart problems, allergies, kidney disease, etc.) may want to allocate higher monthly contributions.
An alternative is to protect your health care account with an inexpensive catastrophic policy. That only adds $7 to $10 to your health savings and protects it against that unforeseen veterinary expense. It can always be dropped as your pet ages and the health account fills.
The Financial Benefits
Self-insurance is always a better choice because you reap the financial rewards and control your vendors. Unfortunately, with health care costs so high, home replacement cost high, liability litigation likely for car and home mishaps, it is just not possible to be our own health, dental, homeowners, life, and auto insurance company. Veterinary health does provide that opportunity. Many owners will actually have money left over in their accounts after the pet is deceased to fund the new pet’s initial veterinary needs.
Dr. Ken Tudor
*Today's post originally ran on October 4, 2012