Pet insurance redux: Dazzle vs. Maple

I think I may have insured the wrong dog.

Nearly a half a year after my first blog post of substance, I can see it so clearly. I was gambling, and I was doing it just like a gambler does it. Just like the fan in the stands who says of his favorite hitter who has gone 0 for 5, "He's due." I did it just like that, using the same stupid logic. He's not due, you idiot, he's in a slump, and he's more likely to strike out than he is to hit the ball. He's a bad bet, and later you'll see, in hindsight, that you should have known better.

Now I see, in hindsight, that I should have known better.

I chose to purchase health insurance for one dog, rather than two, to test the system. Nothing wrong with that. But in choosing the dog to insure, I employed all the classic gambling blunders. I decided that because I had barely spent any money at the vet on Dazzle (Dog 2) that she was due. I decided that since I had just spent over $1000 at the vet on Maple (Dog 1) that there was no reason for her to get sick again any time soon. My logic seemed 100% reasonable at the time.

But in fact, Maple is just like [insert your favorite brilliant pitcher who is healthy only 25% of the time here]. Every time he comes back to play, everybody expects great things from him. But in truth, he's the pitcher most likely to be injured next, again, because he's just plain prone to injury.

So now I know: Maple is prone to gum infections, and she is generally prone to special circumstances that make her the more expensive dog. Dazzle costs money, too, but not the way Maple does.

And now I'm thinking: Maybe it's time to insure Maple, as well. She's probably going to need antibiotics again before long ($150 for 2 weeks' worth) and she's probably going to need yearly dental cleanings (a few $hundred even without extractions). Oh, Maple, Maple, Maple. A dog that jumps on guests, a dog that jumps when she hears even the faintest jingle of her leash, a dog that hogs my bed, a dog that has more love to give than there are people to receive it. A dog that costs me more money than I spend on anything else besides rent.

A dog that's worth it, with or without insurance.

Pet health insurance - a luxury item?

I have pets. If you knew me in person, you would also know that "I have pets" is an understatement. In college I started keeping reptiles as pets because they were allowed in the dorm and because I thought I could use them as a way to distinguish myself. It worked. But when you keep reptiles as pets, you tend to have a tank full of them (or more than a tank full: CAGES full). And if you care about them enough, you tend to have a thick file of their vet bills.

So once I was out of college and on my own, I sometimes investigated pet health insurance. I remember filling out several give-me-a-quote forms online over the years, always eventually letting the cookies expire.

Why didn't I decide to try pet health insurance? Two reasons:

1) I couldn't decide which pets to insure. As I said, I had quite a few. It would have been nothing more than gambling to choose one or two to insure, as I believed I loved them all equally. And spending money each month on a half dozen animals (or more) hardly seemed like it would be cost effective in the end. (In hindsight, I now know I was correct.)

2) Pet health insurance has always smacked as a luxury item to me. I always had this idea that the people who had health insurance for their pets were the same people who took their dogs to psychologists, who had in-home groomers and unnecessary dog walkers (unnecessary because the owner didn't go anywhere during the day; I should note that I am in favor of hiring dog walkers when it's called for). Not that I've ever been against pet pampering, or luxury items for that matter, but I like to pick my luxuries carefully.

And then two years ago, something extraordinary happened: I got dogs. Oh the cuddly, unconditional loving world of dogs! How did I survive my first 33 years without them? The nuzzling, the licking, the jumping, the smiling, the running, the snuggling, the DOGS! (And I pamper them, and they have a wonderful dog walker to pamper them on the days that I go to work.)

Ahem. I am actually coming to a point, honest.

How did I decide to try pet health insurance?

1) I spent a lot of time thinking about it. As with every major financial decision, I believe individuals should always take their time, analyzing every angle. I personally thought about pet insurance for many years, between 5 and 10 of them. This may be an extreme length of time to make a financial decision, but it worked for me.

2) I waited for a catalyst. In my case, getting dogs was the first part of my catalyst. I kept pets for many years, but bringing dogs into my home is what made me realize just what I was willing to spend on these animals if they ever had problems, and to start seriously thinking, again, whether to take some sort of preventive measure. I needed a reason to make the leap. And then, as the second part of my catalyst, I spent an extraordinary sum of money on one of my dogs late last year that made me seriously worry about my financial health. I realized that this is why people buy insurance. It is not a luxury item, but an expense that is supposed to help pet owners stay in good financial health. Because of the issues I've already touched on, I don't think every pet owner needs health insurance coverage for every pet they own. It is not always a sound financial strategy. But if you have the right pets, and the right catalyst, I started to believe it might in fact be a good idea.

3) So I did the math. And here I will share it with you:

I brought my first dog into my home in August 2005, and the second in December 2006. Here is a breakdown of my veterinary costs for each dog:

Dog 1 (29 months of care)
Physical exams: $272.50
Vaccinations: $333.50
Tests (routine blood, fecal, heartworm, etc.): $367.40
Heartworm/flea preventive: $203.59
Dental cleaning: $376.75
Medicine: $256.92
Injuries: $248.70
Total: $2059.36 (avg. $71/month)

Dog 2 (14 months of care)
Physical exams: $58.00
Medicine: $29.80
Heartworm/flea preventive: $114.35
Total: $202.15 (avg. $14/month)

Some notes on the breakdowns:
1) I lumped all treatments for injuries into one category just for classification purposes; I did not break out each injury invoice into tests, meds, etc. I can use this information to help predict what I might spend on unforeseen injuries in the future.
2) Dog 1 has had worse luck in every department than Dog 2, accounting for much of why she has cost more, but Dog 2 is almost due for her annual physical exam and vaccinations, which will bring her monthly average up a significant amount. There is nothing inherently less healthy about Dog 1.
3) Heartworm/flea preventive costs are what I paid for them; they still have several months of preventive meds left, so each dog's average cost will actually decrease with each month. (Everything else being equal.)

Then I went to a pet health insurance web site, and decided which level of coverage to investigate.

First, I should say that I chose a certain insurer simply because a veterinarian friend has told me they are the oldest, most popular, and most financially secure. I needed to keep that decision simple.

So the insurer offers two plans: Standard and Superior. The Superior plan offers a higher benefit maximum. I again decided to keep this decision rather simple, and opted for the Standard plan without doing any actual math. The benefit maximum is $9,000, which I decided was enough. Choosing the Superior plan's $14,000 benefit maximum didn't seem to justify the higher premium, as I am on a pretty tight budget. $9,000 is an awful lot for young, healthy dogs; even if something catastrophic does happen, the plan will still save me $9,000 so I'd regard it as a win. In a year I can go back and discover whether I made the right choice or not.

The remaining decision was whether to choose an optional well-pet rider. This rider covers routine costs such as annual exams, vaccinations, fecal tests, x-rays, heartworm/flea preventive; in short, routine treatment for well pets, plus the stuff that most pets have to have done at some point, short of care for serious, unforeseen events. I definitely wanted one of these riders because even routine vet care is expensive and I am *guaranteed* to have to pay for routine vet care for the rest of my pets' lives, regardless of whether they are ever injured or sick again. A Core and a Premier rider are offered, the difference being that the Premier offers a slightly higher benefit than the Core, and it also offers spay/neuter and dental cleaning coverage. I decided to go with the Core rider because both dogs' teeth are currently in good shape, and both dogs are already spayed. The benefit difference is not large.

So I got a quote for insuring the dogs at these levels of coverage.
The dogs are the same breed and about the same age.

Quote for insuring one dog only:
$29.50/month (or $330/year, which averages to $27.50/month)
Note: the yearly amounts are due in full at the beginning of each year; I have supplied monthly averages just to be able to more easily compare premiums to each other and to my actual costs.

Quote for insuring both Dog 1 and Dog 2:
Dog 1: $29.50/month, or $330/year (which averages to $27.50/month); annual multi-pet discount of $8.70
Dog 2: $27.92/month, or $311/year (which averages to $25.92/month); annual multi-pet discount of $7.75
Average payment for both dogs: $56.05/month, or $624.55/year (which averages to $52.05/month)

The annual payment is a better deal, but is a yearly savings of only about 7%. And that does not take into account what I could earn on my money throughout the year if I choose to pay monthly instead of annually. So I decided to look at the monthly option, figuring that I will likely earn the difference in interest and through other investments over the course of the year.

So I was looking at paying $29.50/month to insure one dog, or $56.05/month for both. Looking at the math I did above, you can see that $56.06/month is a savings of about $29/month over what I've averaged in vet payments since I've had both dogs. Even if the insurance plan saves me only 50% of my vet bills, I'd still come out ahead. But again, my current tight financial situation came to mind and I was afraid of the $56.05 figure. Maybe, I thought, all my big expenses were behind me. Maybe the dogs will be injury-free for a while. Maybe I could just insure one dog, and spend only $29.50/month. But is choosing to cover just one dog really the right financial choice, saving $26.55/month? How could I even choose which dog to cover? Insuring only one dog seemed to go against everything I thought I had already figured out.

But I thought about it some more, and focused on two points:

1) Late last year, the doctors performed every test known to man on Dog 1. She just had a dental cleaning, many blood tests, and she isn't due for her annual exam for some time. And her rabies vaccination is good for 3 more years.
2) Dog 2 is due for her annual exam and vaccinations soon.

I decided to get pet health insurance for Dog 2 to test the system. I've heard mixed reviews on pet health insurance coverage over the years, and this seems like a good opportunity to test out the claims process. I'll even get some pretty instant gratification on this, since Dog 2 will visit the vet soon. (There is a 14-day waiting period for the insurance to kick in, but we don't need to go in quite that soon.)

So I am going to keep an eye on the dogs' veterinary costs over the next few months to a year and do the following:

1) I will see if the $9,000 maximum benefit was the right choice. Of course there is no way to know if this will be enough forever; Dog 2 might cost me next to nothing this year and then break the bank next year. But at least we can find out how the first year goes.

2) I will learn whether the Core rider that I chose was the correct one. Should I have opted for dental coverage and a higher benefit? For this problem, I decided that the Premier rider is coverage I can add later if their teeth seem to be getting grungy or if my first claim doesn't pay as much as I thought it would.

3) We will see if the interest on my savings and my investments earn more than what I would have saved by paying the annual rate.

4) Lastly, after a few months of experiencing Dog 2's coverage, I will decide whether to add Dog 1 to the plan.

Luxury: something adding to pleasure or comfort but not absolutely necessary. I do not *want* pet health insurance to be "necessary," but now that I have my reason to try it, I hope that it does its job. I will of course report on this matter in the future. For now, Dog 2 is looking at me with her deep brown eyes, feeling secure that she will experience continued health!