Should you buy pet insurance or just save the money?

Pet insurance is the better way to cover unexpected vet bills for most pet owners, because a policy pays most of a $7,000 emergency starting in your first month of coverage. A pet savings fund works better for owners who already have enough cash to pay a bill that size out of pocket, since every dollar they never spend on a vet stays theirs.

Nobody can predict the week a dog swallows a sock or a cat is diagnosed with cancer, which is the reason running both together is the strongest setup of all. Buy accident and illness coverage for the emergencies you can’t see coming, and save a set amount each month for the checkups and vaccines you can. If you have less than a few thousand dollars set aside, start with the policy while your pet is young and healthy, when premiums are lowest and nothing is excluded yet — this way, you can make sure you’re covered if you need to protect the furriest member of your family.

How much does pet insurance cost compared with a pet savings fund?

Pet insurance costs $10 to $120 a month and leaves you paying roughly $1,350 of a $7,000 emergency. A pet savings fund costs whatever you choose to put in and leaves you paying the entire $7,000 unless you have already saved that much. Policy details vary by company, but the tradeoff below holds across the market.

Why a pet savings fund takes years to cover an emergency

A pet savings fund needs months or years to reach a balance that handles a real emergency, and pets get sick on a schedule nobody controls. Setting aside $100 a month puts you almost six years out from $7,000.

“It takes time to ramp up,” says Maya Prosor, chief business officer with insurer Lemonade. “Savings accounts don’t really match in terms of the cycle of expenses for pets.”

You could bring a puppy home in March and face a $3,000 bill in April because he swallowed his new squeaky toy. A policy handles that once the waiting period ends, which usually runs a few days to a few weeks after you buy. From that point, you have full benefits up to your annual cap.

When is pet insurance worth it?

Pet insurance is worth the cost for young pets, breeds prone to expensive medical problems, and owners without much cash in reserve. All three are easy to check against your own situation.

• You have a puppy or kitten. Young pets are cheap to insure and rarely carry pre-existing conditions that block coverage. This is the best moment to buy, and the price never gets lower than it is right now.
• Your pet’s breed racks up medical bills. MetLife Pet Insurance lists Cavalier King Charles Spaniels, Dachshunds, English Bulldogs, German Shepherds, Great Danes, and Pugs among the dog breeds with the most medical problems.
• Your savings are thin. This is why policies skew young. “The cost of vet care is rising,” Prosor says. “How much can a 22-year-old put aside for a dog?” Not much, usually, and 75% of Lemonade’s pet insurance customers are under 35.

When is a pet savings fund the better choice?

A pet savings fund beats pet insurance when you can absorb a four-figure vet bill without stress and you will not spend the money on anything else. High income or an existing cash cushion is what makes this work.

“There is a percentage of the population that can self-insure,” Prosor says.

Saving also makes more sense once your pet is older. Premiums rise steeply with age, and by then your pet likely has conditions a new policy would exclude as pre-existing. You would pay more for coverage with more holes in it.

Is pet insurance cheaper than self-funding over a pet’s lifetime?

Pet insurance saves you real money when your pet gets seriously sick and costs you very little when it doesn’t. Two hypothetical dogs, both insured for 12 years under the same policy terms and priced with treatment cost estimates published by Nationwide, show the range.

• The dog who got sick. Allergies, a urinary tract infection, dental disease, and seizures ran up $15,359 in vet bills. His owner paid $11,232 in total, counting every premium, deductible, and co-pay. Insurance saved him $4,127.
• The dog who stayed healthy. Allergies and dental disease ran up $11,830 in vet bills. His owner paid $11,966 in total, again counting every premium, deductible, and co-pay. Insurance cost him $136.

Look at what a policy does at both ends of that range. When your pet gets sick, the coverage kicks in and absorbs thousands of dollars you would otherwise have handed the vet in a single visit. When your pet stays healthy, you are out about a dollar a month for 12 years of knowing a $15,000 bill could never blindside your family. 

Nobody can look at the dog on their couch and know which one they got. That is the whole reason insurance exists, and why being ready beats trying to predict.

“Insurance is there for a reason,” Prosor says.

Should you buy pet insurance and keep a savings fund?

Buying accident and illness coverage while saving separately for routine care costs less than a full policy and still covers the emergencies that do real financial damage. This hybrid setup is where a lot of owners land once they run the numbers.

Accident and illness coverage prices well below policies that bundle in wellness care. Vaccines, annual exams, and flea and tick prevention arrive on a predictable schedule at predictable prices, so they belong in a monthly budget rather than a policy.

The reason this works is that you cannot forecast the expensive half. Wellness care is a known cost you can plan around, while a torn ligament, a swallowed toy, or a cancer diagnosis arrives without warning and without regard for your account balance. Insuring the unpredictable half and budgeting the predictable half means you pay a lower premium than full coverage would cost and still keep a $7,000 emergency off a credit card.

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