Pet Insurance Premiums Going Up? Some Options to Save

This article was originally written for & published on Business Insider

Recently, one of our wealth management clients reached out to ask what they should do about their pet insurance policy. “My pet insurance premiums recently jumped through the roof,” they said. They wondered if they should change providers—or drop their coverage altogether.

Reviewing and analyzing all kinds of insurance policies is part of the protection planning we do for clients. We look at their overall financial picture, identify areas with gaps in coverage, and provide recommendations on how much insurance they need.

Just as importantly, we consider what they don’t need. That’s usually the category where pet insurance falls.

Our typical recommendation for pet insurance

Pet insurance is one of those things that we don’t often recommend. The reason is the same as why we don’t often suggest short-term disability insurance: It may be more cost-effective to “self-insure.” 

In practice, this means keeping a fully-funded emergency reserve to cover costs should something unexpected happen—including surprise vet bills or medical care for pets. Yes, you need to pay out of pocket for those costs… but the idea is that, in the long run, you save money by not paying insurance premiums.

But self-insuring is not an option for everyone. If you can't manage unpredictable expenses in your budget, insurance may help minimize those big out-of-pocket hits.

Even if you do have the cash flow and savings power to put away large sums of cash earmarked for emergencies, there are cases where getting (or keeping) pet insurance can benefit you.

That was the case for this client who asked us if they should keep their pet insurance policy.

Dropping pet insurance coverage might make the most sense

Our client first got pet insurance coverage for their new puppy. At the time, the insurance cost was fairly cheap. It cost about $25 per month.

But that was a decade ago. Now, they had a 10-year-old dog and an insurance policy that cost a hundred bucks per month more.

I advised them that this could be a "six one way, half-dozen the other" type of situation— it could make sense to keep the policy, and it could be completely reasonable to drop it.

Given that the dog was older, it was reasonable to assume more veterinary care was necessary. The pet insurance premiums likely went up because of that; a 10-year-old dog is likely classified as a "senior" and therefore more expensive to insure regardless of carrier.

Being able to self-insure was one argument for dropping the coverage. Our client could cancel the contract and direct their $125 in monthly premiums into a high-yield savings account earmarked for vet bills.

They also had sufficient existing liquid assets, cash reserves, and strong income to handle a big medical cost should it occur, even without the need to redirect the old premium cost into their savings.

...Unless insurance coverage provides peace of mind 

The case that I outlined for keeping the pet insurance was two-fold:

1. It could give peace of mind to know the coverage is there if needed.
2. There was real potential the dog would require more frequent and more varied medical care with age.

Dogs have all kinds of "-ologists" now, in addition to regular veterinarians. There are many more treatment options for various ailments that we didn't even access to on behalf of our pets 10 or 15 years ago.

If the family felt they would want to take their dog to any available specialist needed, pet insurance would be a good thing to keep since they were more likely to use it.

How to reduce premiums on pet insurance if you hang on to your policy

My client’s question was not just should they keep insurance or not. They also wanted to know what to do about the rising premiums.

I advised them that, if they wanted to keep the insurance, the next step would be to get quotes from other carriers to compare the current policy to a new option from a different company.

With any kind of insurance policy, pet or otherwise, I strongly recommend shopping around and getting at least 3 different quotes so you can compare coverages and rates. You can save a lot of money simply by looking at what’s available on the marketplace.

Another way to save on premiums is to consider the policy itself. Some provide more coverage than others; you may or may not need those extras. 

Sticking with a simpler policy may mean getting less covered, but that also tends to offer a lower premium. At the end of the day, personal needs and preferences will point to the right decision. 

For our client, they ultimately decided to keep their pet insurance coverage. They anticipated using the benefits more often as their dog got older.

They also shopped around and switched insurance carriers. Their new premium is currently around $50 per month, which saves them about $900 per year.

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