Part 1: What is Pet Insurance, How it Works, Types of Pet Insurance
Part 2: Pros and Cons of Pet Insurance, Should You Buy, Where to Buy and Cost
Introduction to Pet Insurance for Kids and Teens
This video explains the concept of pet insurance in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about insuring pets, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Kindergarten
- Elementary School
- Middle School
- High School
The topics covered are:
- What is pet insurance
- How does pet insurance work
- What are the types of pet insurance
- What are the advantages of pet insurance
- Are there any disadvantages of pet insurance
- Should you buy pet insurance
- Where can you buy pet insurance, and how much does it cost
What is Pet Insurance?
Pet insurance is a health insurance policy for your pets, primarily dogs and cats.
It’s designed to cover a portion of the expensive pet-related medical costs like those for illness, accidental injury, chronic conditions, prescription medication, surgery, and more.
Just like your own health insurance, you pay a monthly premium to an insurance provider in exchange for coverage of specific pet-related expenses.
The exact coverage varies by plan: some policies only cover emergencies, while others include preventive care, illnesses, and more. Generally, the higher the coverage, the higher the cost.
How does pet insurance work?
First, you choose an insurance provider and select a plan that fits your needs. Once enrolled, you pay monthly premiums to maintain coverage.
If your pet gets sick or injured, you visit any vet of your choice and pay the bill upfront. Then, you submit a claim to the insurance company, with the receipts, either online or through an app.
If the expense is covered by the policy, your claim will be approved and you will be reimbursed through direct deposit or by mail. However, you will not get the full cost back.
How much you get depends on your deductible, reimbursement rate, and annual limits.
Deductible is a certain dollar amount you need to pay first, before the insurance kicks in. Generally, the higher the deductible, the lower the premium.
Once you pay the deductible, the insurance company will reimburse you up to a certain percentage of the balance, which is called your plan’s reimbursement rate.
In addition, plans have annual limits, which is the maximum amount the insurance will pay for that year.
For example, if you have a policy with an 80% reimbursement rate and a $200 deductible and your vet bill is $1,000, you’d pay the $200 deductible, and the insurer would reimburse you 80% of the remaining $800, which comes out to $640.
What are the types of pet insurance?
There are three main types.
Accident-only plans cover expenses resulting from accidents, like broken bones, swallowed objects, or injuries from being hit by a car. This could include hospitalization, medicines, tests, surgery, etc.
These plans are the most affordable but won’t cover illnesses or preventive care.
Accident + illness plans, also called comprehensive plans, cover everything that accident only plans do, as well as expenses related to illnesses like cancer or diabetes, as well as chronic conditions, behavioral problems, etc.
This is the most popular type, although it also has higher premiums.
Wellness plans are usually offered as add-ons to the other 2 plans and cover preventive care like vaccinations, routine blood work, and dental cleanings. Some pet insurance may also cover alternative treatments like acupuncture, physical therapy, behavioral therapy, etc.
If a policy doesn’t cover them, they can usually be purchased as add-ons.
However, pre-existing conditions, cosmetic or elective surgeries, and expenses related to breeding or end-of-life are usually not covered.
What Are the Advantages of Pet Insurance?
Pet insurance provides significant peace of mind and financial protection.
Unexpected illnesses or accidents can lead to very high vet bills, sometimes many thousands of dollars. These possibly catastrophic events become far more manageable financially with pet insurance.
Also, there are no in-network or out-of-network vets, so you can see any licensed vet of your choice.
With only 3 main types of plans and many add-ons available, you can easily customize the policy to suit your needs.
Are There Any Disadvantages of Pet Insurance?
The premiums can be quite expensive, especially for older pets or breeds prone to genetic conditions. Some companies also steadily increase the premiums at the time of renewal to account for the age and health condition of your pet.
In addition, there are waiting periods before the policy kicks in, and if there is any medical emergency during this time, the insurance will not cover it.
Despite having insurance, pet owners have to first pay for the treatment, and then go through the claims process to get their money reimbursed.
But the biggest con is that pre-existing conditions are usually not covered.
Should I buy pet insurance?
Pet insurance is not a legal requirement. Deciding whether or not to buy pet insurance depends on your financial situation, your pet’s health, and the premiums for insuring your pet.
For example, if you wouldn’t be able to cover an unexpected vet bill, pet insurance could be a good option.
But if you have the ability to cover emergency bills on your own, you can choose to self-insure by setting aside an emergency fund for your pet.
Usually pet insurance makes the most sense for unexpected serious health events that can run into thousands of dollars. So even if you go for pet insurance, choose one with the highest deductible you can afford to keep your monthly premiums low.
Where can I buy pet insurance, and how much does it cost?
You can buy pet insurance online directly from the insurance companies.
The cost varies significantly based on factors like your pet’s breed, gender, age, and location. The deductible, reimbursement rate, and annual limits also impact your premium.
Plans with broader coverage and lower deductibles are typically more expensive. But on average, premiums for dogs are around $50 per month, and premiums for cats are around $30 per month.