Pet insurance didn't feel worth it—until my cat needed a $3,000 surgery

My wife and I never gave pet insurance much thought — until we were told our cat Wally needed surgery that would cost nearly $3,000.

Until then, we had dismissed a pet insurance policy as an unnecessary expense since the premiums and deductibles exceeded the typical annual vet costs we paid out of pocket.

Apparently, we weren't alone in that thinking, as only about 25% of pet owners have pet insurance, according to a recent NerdWallet survey.

And yet, when it came down to it, there was no question we'd spend more than $3,000 if it meant keeping our chunky cat healthy and alive.

In the 10 years since we adopted our exquisitely lazy and self-possessed tabby, he has become our muse, the subject of endless chatter, social media posts and at least one professionally painted portrait that's displayed on our wall.

And as someone who hadn't owned a cat before, I was surprised by the strength of our bond over the years, especially after spending every single day together during the pandemic.

But in 2023, during a fit of the "zoomies," Wally leapt off our bed and landed with a hard thud on the floor. We think that's when the limp started. After getting X-rays at the vet, they said he had torn a ligament in his leg.

Without treatment, he would likely develop osteoarthritis, which would only worsen his pain. All told, the related vet bills, including X-rays, cost over $3,500. We paid for the surgery with savings, and Wally has since recovered.

Shortly after the surgery, we signed up for pet insurance through my wife's employer. The decision was a no-brainer for us: We already got burned once by unexpected expenses and our cat wasn't getting younger. Plus, we got a reasonable rate of about $30 per month.

But more than that, we want to avoid tough decisions down the road.

Typically, pet insurance covers accidents, illness and wellness, which pays for routine care like annual exams. Accident and illness coverage are usually bundled together as a "comprehensive" plan, while wellness is commonly an optional add-on.

Comprehensive pet insurance policies that include accidents and illness cost an average of $53 per month for dogs and $32 per month for cats, according to personal finance website ValuePenguin. Adding wellness coverage increases the cost to $95 per month for dogs and $51 per month for cats.

These rates assume a rather common yearly deductible of $500, which is the amount you have to pay out of pocket before the insurance kicks in. These rates are also based on policies offering 80% coverage for vet bills, up to a maximum coverage of $5,000 per policy year.

You can find plans with lower deductibles, higher maximums and 100% coverage, but those factors will likely raise your monthly premiums.

Crucially, pet insurance does not cover preexisting conditions, which are based on medical records from prior vet visits. With Wally, periodontitis is a precondition, which means that we will have to pay for tooth extractions, if needed. 

I can see why most people don't sign up for pet insurance. To many, it may not seem worth the cost. And in some cases, it isn't.

Routine vet visits, including checkups, heartworm tests and vaccinations, typically cost less than $300, according to estimates by health-care financing company CareCredit. If that's all your pet needs for a given year, you probably won't exceed a $500 deductible and would save more money by simply paying for these services out of pocket.

But there's also a downside to this approach. My wife and I learned the hard way that emergency or life-saving procedures like hospitalization or surgeries can cost more than $3,000, which many people can't easily afford.

These expenses are often unexpected and can put pet owners in the difficult position of choosing whether a necessary procedure is worth the cost, especially if they have an ailing or elderly pet. 

In our case, we aren't thinking of pet insurance as a way to save money. Instead, it's a way to soften the blow of unexpected costs when they arise. We know that some procedures won't be covered, but it's a risk we're willing to take.

Financial planners who spoke with CNBC Make It were divided on whether pet insurance is worth the cost.

That's because the value for any given pet insurance policy depends on several factors, including your pet's overall health, whether your pet is genetically prone to specific diseases, or your pet's preconditions and lifestyle. The cost of your plan and what it covers will be big factors too. 

"Insurance is never a slam-dunk purchase," says Rikin Shah, an insurance agent and founder of the insurance broker GetSure.

To help decide whether pet insurance is right for you, he suggests that you "crunch the numbers" by comparing the annual cost of insurance with your vet bills in the last year. If the numbers are somewhat close, then you'll likely feel better about purchasing a policy, he says.

"I would recommend weighing the risks qualitatively," says Shah. "If your pet is young, healthy and stays indoors primarily, an emergency fund may make more sense. However, if your pet does not have significant preexisting conditions and is older or is a breed prone to health issues, insurance may be the safer bet."

Another option is skipping insurance in favor of a pet emergency fund that includes a few thousand dollars for pet costs.

"Because of the high cost, limitations and fine print in many policies, as well as the possibility of not needing the service, the risk of care for pets should be managed through planning, not insurance," says Carol Fabbri, a certified financial planner based in Denver.

Of course, whether you choose pet insurance is a personal decision that isn't entirely based on saving money — that's what makes it a difficult decision.

"I have never recommended pet insurance per se, but I have it for my cat and have suggested people look at it," says Nicole Sullivan, a CFP in Libertyville, Illinois. "For me, the peace of mind is reason enough to have pet insurance, but it can certainly vary from family to family."

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