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How does pet insurance work?

Read about rates, deductibles and coverage limits

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    Pet insurance covers the medical costs of treating your beloved pet in the event of an accident or illness. While it might seem similar to regular health insurance coverage, there are a few key differences. For example, rather than the doctor filing a claim with the insurance provider, you instead pay upfront and are later reimbursed by the pet insurance company. As a result, there are also no pre-authorizations to contend with, so you can make the best decision for your pet without consulting an insurance agent.

    Unlike human health insurance, pet insurance policies don't include wellness visits, preventive prescriptions or preexisting conditions. A few companies may offer preventive add-ons that cover annual exams, heartworm tests and other wellness costs. Pet insurance companies are very transparent about what is and isn't covered, so be sure to confirm that all your pet's conditions are covered before purchasing a policy.

    All policies come with an annual deductible, reimbursement rate and maximum annual coverage. Actual numbers vary from policy to policy, but most companies allow you to customize coverage to meet your pet's medical needs. Understanding these details will help you choose the best policy for your budget.

    • Deductibles: A deductible is the annual out-of-pocket cost you have to pay before coverage kicks in. Insurance providers typically allow you to select from a range of deductibles, often from $0 to $1,000. The lower the deductible, the higher your monthly premium.
    • Reimbursement rate: When you create your policy, you'll also be able to select a reimbursement rate. Companies usually offer from 70% to 100% coverage. Once you submit a claim to your provider, they'll reimburse you up to that rate. For example, let's assume you have a policy with a $500 deductible and a 70% reimbursement rate. On a vet bill of $1,000, the insurance company would reimburse you $350. As with deductibles, if you have a higher reimbursement rate, your policy will be more expensive.
    • Maximum coverage: A pet insurance company will only cover a certain amount each year, usually between $2,000 and $30,000. However, some providers do offer unlimited coverage with a higher premium. If a more expensive treatment is required, the insurance policy won't cover any more than its maximum benefit.

    What is pet insurance?

    Pet policies act as reimbursement plans. You pay your vet upfront and get reimbursed afterwards.

    Pet insurance is medical coverage for your pet — it covers things like accidental injuries, cancer, chronic illnesses and more. There are no networks to worry about, so you can use a pet insurance policy with your current vet. This type of insurance is only meant to cover the unexpected, so things like annual exams, vaccinations and preventive prescriptions aren't included. Similarly, you can't use a pet insurance policy to cover a preexisting condition.

    Pet policies function as reimbursement plans, so you'll pay your vet at the time of service and request reimbursement later. Fortunately, pet insurance companies issue reimbursements quickly, typically within a week or two. In some situations, the company may be able to pay the vet directly, but this depends on your vet office and the insurance provider.

    Pros and cons of pet insurance

    The biggest advantage of pet insurance is the financial protection it provides in worst-case scenarios. For expensive medical costs like cancer treatments, emergency treatment and chronic illnesses, a pet insurance policy with good coverage bears the financial burden. Reimbursements are fairly simple and streamlined, and you don't have to worry about pre-authorizing procedures with the insurance company. You can also use your policy with any veterinarian.

    Pet insurance coverage is customizable by deductible, reimbursement and annual maximum. Since policies aren't restricted by upper age limits, you can update your policy to ensure all of your pets’ conditions are covered as they age. Policies generally cost around $45 per month for dogs and $25 for cats, so it's an affordable expense compared to out-of-pocket vet costs.

    However, there are a few drawbacks to keep in mind. Preexisting conditions won't be covered, and every policy is governed by an annual maximum, deductible and reimbursement rate. Pet insurance also doesn’t cover costs like office exams and wellness expenses, so you won't always get your full payment back when filing for reimbursement. As your pet gets older, the monthly premium will grow more expensive.

    Compare pet insurance pros and cons

    Works with any vetNo preexisting conditions
    Covers most common expensesCoverage maximums
    Customizable policiesCan be expensive
    No age limitsNo preventive coverage
    No pre-authorizationsMust be reimbursed

    What to look for when buying pet insurance

    Your pet's health needs are unique, so it's important to track down the right policy for them and for you. Consider your monthly budget and which coverage options you'll need to care for your pet. Here are a few things you’ll want to keep in mind when selecting a policy:

    • Cost: Whether you pay annually or monthly, your pet insurance premium cost is an important factor. Compare prices from different providers to narrow down your options. Pet insurance policies typically run from $30 to $50 per month, though price is determined by your pet's age, breed and location.
    • Pet eligibility: While age maximums aren’t common, insurance companies rarely insure pets younger than eight weeks. Most providers offer plans for dogs and cats, but coverage for exotic pets is harder to find. You should also confirm that there are no other enrollment requirements, such as annual exams or vaccinations.
    • Coverage and exclusions: Make sure the policy covers any conditions or medical needs your pet has. While preexisting conditions are always excluded, other exclusions will depend on the insurance company. Be sure to read these in detail to understand what isn't covered by your policy.
    • Waiting periods: Insurance policies come with waiting periods for coverage. These can range from a couple of days for accidents to six months for orthopedic treatment. Once the waiting period has passed, coverage for the condition or event begins.
    • Maximum benefit: If you anticipate your pet having expensive treatments over the course of a year, consider finding a company with a high maximum benefit. Some companies even offer policies with unlimited coverage.
    • Deductibles: Your deductible should be an amount you can comfortably pay in the event of an emergency. Most providers offer options from $250 to $1,000. Some companies offer $0-deductible policies, though these typically are pricey.
    • Reimbursement rate: While a lower reimbursement rate will keep your monthly premium low, it will make your out-of-pocket costs significantly higher for expensive treatments. Do some quick budgeting on what you can afford in an emergency and find a provider who offers a rate you're comfortable with.

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      Bottom line: Do I need pet insurance?

      To decide whether or not you need pet insurance, you'll first want to consider the health needs of your pet. Do you anticipate expensive medical issues in their future, such as cancer or joint problems? Next you'll want to evaluate how this would affect your finances. If it would be a burden to pay out of pocket for expensive vet costs, a pet insurance policy will protect against the unexpected.

      Research pet insurance companies to find a policy that meets your needs. Then evaluate monthly premiums, coverage, exclusions and other policy details to ensure the company you’re considering works well with your budget and your expected vet costs. It's a good idea to compare policies from multiple providers to find the best option for you and your pet.

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