Financial Literacy - Families and Finance
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Financial planning for dogs and cats

Pets have numerous redeeming qualities. Studies show they lower blood pressure, and owners can attest that their pets provide emotional support and endless entertainment. As a trade-off for their many positive qualities, pets also require a lot of care and devotion throughout their lives.

And Americans do care. They spent more than $43.2 billion on pets in 2008, according to a recent survey by the American Pet Products Association, or APPA. Despite the economic recession, the APPA estimates that the total will increase more than $2 billion in 2009.

Yet two areas are often overlooked by pet owners: pet health insurance and pet trusts. Both are affordable for most families and can even save your pet's life.

Many pet owners are forced to euthanize an ill or injured pet because of a lack of money. Or, when their owners die, many pets end up at shelters, at risk of being put to sleep. Planning for your pets' health and your eventual mortality can help your pet avoid becoming a shelter statistic.

Pet health insurance

Health insurance coverage is available for many different kinds of pets, but dogs and cats are the most likely to be covered because they are the most popular pets in the country, according to the APPA.

Veterinary Pet Insurance, or VPI, compiled a list of the most expensive medical conditions for dogs and cats from an analysis of claims received in 2007.

Most expensive medical conditions
ConditionAverage feeConditionAverage fee
1. Intervertebral disk disease$2,8441. Foreign body ingestion
(small intestine)
2. Lung cancer$2,0322. Urinary tract reconstruction$1,391
3. Gastric torsion (bloat)$1,9553. Foreign body ingestion (stomach)$1,391
4. Foreign body ingestion (small intestine)$1,6294. Rectal cancer$1,011
5. Cruciate rupture$1,5175. Bladder stones$989
6. Foreign body ingestion (stomach)$1,3986. Intestinal cancer$942
7. Cataract (senior)$1,2447. Hyperthyroidism (radiation)$920
8. Bone cancer$1,0598. Fibrosarcoma (skin cancer)$780
9. Pin in broken limb$1,0009. Acute renal failure$565
10. Brain cancer$91610. Mast cell tumors$497
*Treatment costs vary on a case-by-case basis. Dollar amounts reflect average initial claim fees submitted to VPI and are not intended to suggest typical reimbursements, reflect average national veterinary fees or account for ongoing fees associated with a particular condition.
Source: Veterinary Pet Insurance

According to "A Veterinarian's Guide to Pet Health Insurance," a report compiled by the National Commission on Veterinary Economic Issues, pet health insurance is more similar to dental or car insurance than human health insurance, which comes with copays and many layers of red tape.

Pet insurance for virtually all plans requires that pet owners pay the vet bill upfront and then submit a claim. Insurance carriers usually pay out a preset percentage of the bill or they pay according to a schedule. Some plans also have a deductible.

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Keeping your pet happy and healthy can sometimes be a budget-buster. An accident or illness can cost thousands of dollars to treat and many owners just don't have the scratch to cover an MRI for Fluffy or to pay for Fido's ACL surgery. That's where pet health insurance comes in.

There are currently 12 pet insurers in the U.S. with a variety of coverage levels and prices. Some carriers offer very low-cost accident-only plans and others offer nearly full coverage of any accident and illness including hereditary conditions.

The main difference from medical insurance for people is that owners must pay for treatment upfront and then submit a claim for reimbursement.

Before insuring your pet with one carrier, shop around to make sure you're getting the coverage that will be best for you. No one wants to make life or death decisions for their loved ones based on dollars and cents.

Although some carriers will reimburse policyholders for routine care such as vaccinations and wellness checks, illness and accident coverage is the most cost-effective use of pet health insurance.

"Pet insurance is best used to help cover unexpected expenses from serious injuries or illnesses. It is most appropriate for helping cover serious vet treatments. Routine care and pet meds should be paid out of the owner's pocket," says Mike Hemstreet, owner of, a pet insurance research resource for consumers.

"Just as I don't expect my car insurance to pay for changing my oil every 3,000 miles, I don't look to pet insurance to pay for regular checkups," he says.

When considering pet insurance, consumers have to do their homework. The carriers and policies vary quite a bit on what is covered and what is excluded. Apples-to-apples comparisons can prove difficult.

"Some insurers offer routine care and wellness programs, others only accident and illness coverage. Some insurers pay off a schedule, others pay a percentage of the actual veterinarian bill. All plans have some type of payment cap: either per incident, year or lifetime of pet," says Hemstreet.

Sorting through the myriad options can be a little bewildering at first, and premium costs can range from as little as $10 a month to as much as $100. But if you're clear on what you're looking for in a pet health insurance plan and how much you want to pay, you'll likely find something to satisfy your pet's health and your pocketbook.

"Think about the current pet's age and health status and what is most applicable," says Gail Buchwald, senior vice president of the adoption center and New York City no-kill initiative with the American Society for the Prevention of Cruelty to Animals, or ASPCA.

Not all providers will accept older pets or certain breeds, but others will. Consumers should keep that in mind when shopping for a policy.

It may take some research, but the results can be worth it in the end.


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