Pet owners expect routine costs for vet visits. What usually takes them off guard is an unexpected pet emergency or illness. Pet insurance and a pet savings account can help with that, but which is better, and do you even need to invest in either one?
For example, one of the more common health problems is dog eating inedible things. Puppies are notorious for eating objects that do not fall in the food category. Hair bands, underwear, and even whole tennis balls are quick to gobble up by playful pups. Even a small hair band can cause extensive damage to a dog’s internal organs. Most times when a dog swallows a foreign object surgery is a needed.
Embrace Pet Insurance estimates the veterinary cost for surgically removing a swallowed object between $1,600 to $4,300. Even without surgery, the cost for your puppy eating his favorite toy may still be between $300 to $1,200.
What is Pet Insurance?
Pet insurance is similar to your health insurance, but for your pet. You pick an insurance plan that best fits your pet’s needs. Enroll in your chosen plan, make monthly payments, and then continue using your pet’s veterinarian as usual. Human health insurance and pet insurance do share some of the same requirements, such as premium payments, deductibles, and filing insurance claims.
Having your pet covered by pet insurance also differs from our health insurance in other ways. For example, most veterinarians need you to pay the entire bill when they provide a service to your pet, unless your veterinarian agrees to hold the bill until you file the pet insurance claim. Then, you make a claim for the said amount and pet insurance company refunds you for the cost of the bill.
What Does Pet Insurance Cover?
Most pet insurance plans will cover the following basics under their plans:
- Veterinary exam fees
- Diagnostic treatments
- Prescription medications
- Imagining (MRI, ultrasound, x-ray, etc.)
There are many considerations to be made before choosing the right pet insurance plan, and you can see the full guide here.
How Much Does Pet Insurance Cost?
The cost of pet insurance varies. There are a few factors that play a part in what you will pay, including the plan you choose and your premium.
Your premium is usually paid monthly or on an annual basis. The cost of your premium will depend on your dog’s breed, size, and age (with age usually playing the biggest part).
Your premium for pet insurance may begin as low as under $30 a month. For a more comprehensive plan or a breed who is prone to health problems, you may see your cost go over $100 monthly.
How Does Pet Insurance Work?
To enroll in pet insurance you will first pick a deductible. Your deductible depends on an annual amount or a per-incident amount. Then you will decide on how much you would like the insurance company to reimburse you. The last thing you must do is pay your monthly premium.
Once you have enrolled your pet, you can seek treatment at any licensed veterinarian. Your pet will receive care and you will pay the veterinary bill up front. After you pay your bill, you can submit a claim to your pet’s insurance company. They will review your claim. If they cover the services, you will then receive a reimbursement based on the plan you picked.
Pet insurance companies will reimburse you within 10-14 days after your claim approval.
What is a Pet Savings Account?
A pet savings account is exactly what it sounds like – a bank savings account with funds for your pet's needs. Opening a pet savings account is not something pet owners often consider but should really be one of the first things a new owner should do.
You can make your pet savings account work the same way as pet insurance does – monthly deposits which can later be used for veterinary bills. You can also view having a pet savings account as a way to offset the cost of pet insurance and use both instead of picking just one.
What are the Benefits of a Pet Savings Account?
A major benefit of opening a pet savings account is that you can use the money for anything your pet needs – it's your account, and your money. Whereas with pet insurance, it only covers pet healthcare related costs and you're not in charge of the funds.
Tracking and keeping up with a pet savings account is easy, too. You are the one who deposits the money, making you aware of how many funds go in and out of the account, as well as having the ability to view the balance at any time.
Most banks in the U.S. offer interest for your savings account. While big names like JP Morgan Chase or Bank of America will only offer a measly 0.1% interest, other banks like Ally currently offer 1.9% interest rate, which helps with money depreciation due to inflation. Let your pet’s savings account grow and watch the interest grow with it.
With a pet savings account you also don’t have to negotiate things like co-pays and deductibles as you have to do with your pet’s insurance company.
What Can You Use a Pet Savings Account For?
You can use a pet savings account for your pet’s health needs. Having a savings account can also cover other related pet care needs that go beyond healthcare related ones:
- Pet food
- Pet treats
- Pet toys
- Food and Water Bowls
- Pet grooming
- Dog boarding
- Flea and tick treatment and prevention
If you need to make unexpected home modifications for your pet’s safety, use your pet's savings account.
Another benefit of opening a savings account for your pet is that the funds are available to you at any time. If you have deposited the funds, they will be there right away for when you need them, which is perfect in the case of an emergency.
What are the Cons of a Pet Savings Account?
The biggest con of opening a pet savings account ties in with the major benefit of opening one – you can use the funds for anything, including personal needs, and it can be sometimes tempting to take the funds out for something that you're not supposed to.
If you see a new outfit you can’t live without, you may decide to dip into your pet’s savings account. But if you’re able to handle your money well, as well as not to give into temptations, then having the money available may not be an issue for you.
Another con of opening a pet savings account is timing – it takes a while to build up the necessary amount of money for larger bills. Let’s say you decide to follow the path of many pet owners and deposit your pet’s estimated monthly pet insurance premium amount into savings account: for example, $40 a month. In a year you would have deposited $480 into your pet’s savings account.
Then, your pet has unexpected injury, such as a common knee ligament injury. Your $480 will not cover close to half the estimated cost of treatment. In 2016, the average cost for treating a dog’s knee injury's cost was estimated at $3,456.
In order for your pet’s savings account to successfully work for your needs, you must make regular deposits. You will also need to watch your usage of the savings account. Using the funds may be useful if you or a family member are in a rut. It’s not wise to use them for things that aren’t needed.
Pet Insurance vs. Pet Savings Account
Which One’s Better for You?
In the end, these are two similar but different approaches. Pet savings account and pet insurance have their own pros and cons, and neither one is better than the other if you consider saving money and providing for your pet in case of an emergency. You may only think in hindsight which one could've been better for you, but there's no way you can predict the future.
There are also a few questions you should ask yourself before deciding on whether pet insurance or a pet savings account is better for you and your pet:
- Am I able to fund a pet savings account on at least a monthly basis?
- Can I afford the monthly premium for pet insurance?
- Does pet insurance cover the services my pet needs?
Insurance companies are in the business of making money. You won’t be looking for a real return in money if you pay a monthly or annual premium on pet insurance unless the unexpected happens. Don’t let that deter you from the thought of enrolling, though.
Using the Two Together
The best choice for a pet emergency fund is to actually have three options available to you: open a pet savings account and enroll in pet insurance, then also get a credit for pet care.
Having these three options is costly at first but will help when planned and unplanned vet bills come, and you’ll never have to worry. Credit allows pet owners to take care of their pet’s needs even when their bank account is waiting on payday.
Obviously, not everyone can afford all three options. In that case, you'll have to consider your personal situation and choose what approach works best for you. While there's no clear choice that's better than the other, for a larger number of pet owners who cannot use the three options together, it may be better to prioritize like this:
- Pet Insurance
- Pet Savings Account
- Pet Savings Account with Credit
At some point, your pet savings account may grow large enough to cover larger veterinary bills. Paired with larger available pet care credit, this could be enough of a cushion for those emergencies, and you can probably stop paying pet insurance premiums at that point, and only rely on your pet savings account funds and available credit.
Pet Savings Account + Pet Insurance + Available Credit
While you're building out your pet savings account, using the three together is ideal. A pet savings account allows you to have funds for any of your pet’s needs but mostly save up for the future. Pet insurance in the meantime makes it possible for you to get a reimbursement for emergency care bills.
To claim pet insurance you’re going to need to pay the vet bill yourself after your pet receives services. You can use funds from your pet savings account or available credit for that bill. After the pet insurance company reimburses you, place those funds back into the pet savings account and continue building it to the point when you can finally feel comfortable cancelling pet insurance.
READ NEXT: Pet Insurance – A Beginner’s Guide