The Covid pandemic was disruptive and even catastrophic in many ways. One of the few positive developments during the pandemic was the emptying of animal shelters as we were all homebound and craving companionship. For most lucky pets (and humans), the attachment with their humans has continued post-pandemic.

While pet insurance has been around for many years, it is attracting more attention as views on what constitutes “pet care” have evolved. According to a USA Today Blueprint survey, dog owners spend on average $4,500 per year on pet care which typically includes food, supplies, grooming, routine vet care, dog walking, training, as well as animal health insurance.

Additionally, the cost of veterinary care is rising. While the Consumer Price Index (CPI) was up 3.4% in April 2024 from a year earlier, the veterinarian services category of CPI during this same time was 7.1%. Reasons for the high costs are a tight vet labor supply, more sophisticated and expensive medicine and treatments, and increasing institutional investor ownership of veterinary practices. 

To Insure or Not to Insure

Because so many of us view our pets as a member of our family, we must each answer the very personal question of how much are we willing to spend on their medical care. As with humans, end-of-life pet care can be very expensive and decision making is difficult and strongly influenced by emotion when we are faced with a sudden pet-related healthcare crisis. While there is no guarantee that a pet insurance policy will break even with the amount of lifetime premiums paid into it, it could help defray the cost, especially in the later years when expensive surgeries and procedures are more likely.

The survey by USA Today Blueprint indicates the average cost of pet insurance for dogs is $45/month. Unlimited annual coverage is another $10/month. The actual premium is based on a dog’s health, pre-existing conditions (which will preclude coverage with most carriers), age, and breed. The French Bulldog and Cane Corso (Mastiff) are the most expensive dog breeds to insure, according to Spot Pet Insurance. In general, smaller pets, like cats, cost less to insure. 

Because policies tend to be customized, and quotes from providers depend on many variables, there is no one-size-fits-all or even a picture of which carrier is the best. Every policy has different deductibles, waiting periods, and coverage limitations, similar to a human’s health insurance policy. There are reviews available from companies such as Consumer Reports who published a rating of eight different carriers in 2022.

The pet owner must do the legwork and have a basic understanding of the overall cost and determine whether features such as dental coverage or a dedicated credit card are important. While some may break even at best, there are many pet owners who are grateful for the coverage when their beloved pets are faced with serious medical procedures later in life. 

How the Insurance Works

In general, you choose your vet and pay the bill upfront. You then send a claim to the pet insurer for reimbursement. Most policies have a waiting period from a couple of days to up to 30 days before coverage starts. For best pricing and to maximize the value, pet insurance should be secured when the pet is young and does not have pre-existing conditions. As the pet ages, expect the premiums and deductibles to increase. 

Estate Planning for Pets

In case the owner dies prematurely or is incapacitated, we advise giving some thought to contingency plans. This can be as informal as speaking with a loved one or friend, or you can add a provision to your estate plan with the help of your attorney. A pet trust names a trustee to manage the pet’s care with specifically earmarked funds. You might be surprised to learn that these trusts are fully enforceable by the courts. 

If you’re contemplating the use of pet insurance versus cash pay or a change to your estate plan to cover your pet, please reach out to your Wealth Manager if you’d like to discuss further.

Sources:
Gollub, Heidi and Lobb, Jennifer. 2024 September 2024. USA Today. Cost of Pet Ownership
Carns, Ann. 2024 June 7. New York Times. Looking For Pet Insurance? Some Dog Breeds Will Cost More to Cover
Consumer Reports 2022 Fall Survey Pet Insurance Ratings & Reviews