Should You Buy Pet Insurance?
With the coronavirus having kept most of us at home over the
past seven months, we are learning a lot about our emotions, our families, and
our spending habits. While families flock from urban locations and
existing home prices hit record highs, one financial area many people have not
talked about are pets. That's right…. pets.
Animal rescues and shelters have seen a spike in people
fostering and adopting dogs and cats during the pandemic. The Society for the
Prevention of Cruelty to Animals Los Angeles recently said that adoptions
were double their usual
rate in late June, with 10 to 13 a day. On the East Coast, one in four people
who began fostering pooches "temporarily" from the Animal Care Centers of NYC
at the beginning of the pandemic had adopted them permanently by late June;
usually, only one in 10 opt to turn their foster home into a forever home. The
ACC of NYC said in March that it had received more than 5,000 applications to
foster pets in just a couple of weeks.
All of this news means that many families across America
have now added a new line item to their overall household budget, the cost of
owning a pet. Historically speaking, the national averages for pet
ownership ranges between a cost of $54 a month and $176 a month depending on
what type of pet you have, the breed of the pet, and the where you live in the
United States. However, in a recent study, almost 50% of pet owners say
they spend more than $3,000 a year on their pet mostly due to a lack of really
budgeting in their pets as a household expense.
When you consider your overall risk management plan for your
family finances, you often look at areas including health, dental, vision,
life, disability, and long-term care insurance. But, in recent years,
there is a new type of coverage called pet insurance. Is it worth it for
you take advantage of a pet insurance policy?
Remember, buying insurance is about investing money to
transfer risk. It's not about spending money. That's a huge mistake
families make when they look through the lens of buying insurance. What
you are doing is doling out smaller sums of money in order to protect potential
large, unexpected outlays of cash. Most pet insurance plans cost in the
range of $30 to $50 a month depending on the type of pet you have and the breed
of the pet. Not unlike your health insurance, you will need to closely
examine the deductibles, the co-pays, and the out of pocket maximums for items
such as elective surgeries before you purchase the coverage. Here are a
few items to be reviewing if you are considering buying pet insurance.
A pet policy primarily covers accidents and illnesses. Let's
say your pet gets injured in a car accident, gets poisoned, suffers an
infection, or develops a chronic illness. In these situations, pet insurance
will foot the medical bill. But only after you have met your deductible. You
would normally have to buy a wellness plan if want routine check-ups covered.
Most policies will have some waiting period for accidents or
illnesses. So, if your cat has a fight and suffers major injuries, you will
not be able to buy a policy and then get it covered. Most policies also will
not cover genetic disorders or hereditary conditions such as heart
disease. It is important to read the fine print.
Most policies have an age cap. The general age cap is
14 to 15 years. This means if you have an older pet, you may not be able
to get coverage at all. Just like health insurance, you should expect that
your premiums will increase every year on the policy.
How is your cash reserve? Remember, the main reason
people by insurance is to guard against those financially catastrophic
events. If you are a pet owner and don't have a cash reserve, that
may make it more appealing to buy a policy so a major surgery for your pet
doesn't wipe out your cash reserve or even put you into debt. In general,
there is not a 'network' of providers, but you may want to check with your vet
to be sure they take the pet insurance you are going to purchase.
It's open enrollment season, so you might get a bargain on
your pet insurance if your employer offers it as a supplemental benefit for
their overall benefits package. In the end, like all insurance, getting
pet insurance is a personal choice. If you are worried about the risk of
large expenses or outlays for surgeries or other procedures, then it may be a
good idea to consider buying this as part of your overall risk management plan.
If you would like to receive more information on making smart money moves for your future, be sure to contact us today!
