Abby, the Ribuffo family’s fourth golden retriever, has been fortunate. A veterinarian was able to remove a suspicious looking skin tag found on her body during a grooming session in 2021 and again in 2022. The biopsy showed malignancy and Abby was treated successfully with love and expert care. Today, Abby is well at nearly 10 years of age.
In this case, the Ribuffo family’s good fortune expanded beyond their emotional well-being to include their finances. With a pet insurance policy that included a rider for cancer within the $4,200 annual cost, the family’s only expense for each incident was a $100 deductible and a 10% co-payment.
“She has had this twice, and each time, it was covered,” says Angela Ribuffo, CFP, Abby’s owner and a financial advisor who is president of Raion Financial Strategies in Anchorage, Alaska. “Cancer treatments can be very expensive. Golden retrievers are prone to getting cancer, and because we knew this, we have a cancer rider on her insurance policy.”
By comparison, Ribuffo noted, a friend without pet insurance whose dog needed surgery for the removal of a cyst from each paw paid more than $1,500.
Ribuffo supports the investment in pet insurance to ease a family’s financial stress if a pet, which can easily become an important family member, needs care or treatment.
Pets can have costly accidents and illnesses, such as a broken bone, kennel cough, or cancer. “This can be devastating if you are unable to pay for the care or treatment,” she added.
How Far Would You Go?
Susan Hirshman, director of wealth management at Schwab Wealth Advisory and the Schwab Center for Financial Research, also urges clients to consider what extraordinary steps they might take to care for a pet with whom they are deeply bonded.
For example, pet insurance allowed a close friend, who describes his dog as his best friend, to treat the animal’s cancer and extend its life by two years. “And he didn’t have to choose between his well-being and his dog’s because he had insurance,” Hirshman added.
Another friend who secured a policy when her dog was young was happy to have coverage when the dog developed diabetes in mid-life and needed insulin. Along with covering the costly care, the policy keeps peace in the woman’s marriage as her husband does not share her strong emotional connection to the dog.
Yet there is no one right answer on whether to buy a pet insurance policy.
After assessing whether one can carry the costs associated with pet owning, a person can use pet insurance as a tool in their financial planning toolbox.
According to a USA Today Blueprint survey, dog owners spend an average of $376 per month on their dogs, or $4,512 per year. This includes day-to-day expenses like food, supplies, grooming, routine vet care, insurance, training, and dog walking. It also includes occasional costs such as boarding and vet care in case of an illness.
A similar survey by USA Today Blueprint showed the average cost of pet insurance for dogs is $45 a month for an accident-and-illness policy with $5,000 of annual coverage.
Dog insurance with unlimited annual coverage costs an average of about $10 more per month and financial advisors caution insurance rates will increase with the age of the dog.
Assessing Risk: For Yourself and Your Pet
Individuals must determine their tolerance for financial and emotional risk as well assess the health risk of the animal’s breed. “The question you need to ask is how great of a risk is this to your financial picture and do you want to transfer some of that potential risk, or take it on yourself,” said Hirshman. “To what extent will I go to if my pet has health issues?”
If the financial, emotional and breed risk are high, a person might want to consider pet insurance. “Like fire insurance — you pay for something that you hopefully may never use, but you may be glad that it’s there when and if you need it,” she added.
When considering pet insurance, financial advisors urge pet owners to consider the pet’s current age and health as most policies will not cover pre-existing conditions. Every policy has different deductibles, waiting periods and coverage limitations.
“You have to do your research and see what works best for your budget, situation and pet. Read the fine print,” said Hirshman.
Insurers differ on whether multiple pets can be placed on one policy and whether discounts are offered. Most insurers cover only cats and dogs although some offer coverage for exotic pets.
Like any other catastrophic insurance, the downside is the policyholder could end up paying far more in premiums that any benefits paid out over the life of the pet. Reimbursement for claims may be partial and policies commonly cap coverage at $5,000. If a pet is too elderly or has many pre-existing conditions, an alternative is creating a self-funded pet account, similar to a health savings account for people, Ribuffo said.
Planning for Changes in Your Capacity to Care
Financial advisors should also counsel their clients to plan for their pet’s care in the event the owner becomes disabled, or when their own life ends. Informal options include speaking with loved ones and determining who would be willing to take or adopt the pet.
A second option is writing a Letter of Final Wishes to tell family or friends all about the pet and one’s hopes for their care. A copy of this letter should be included with a person’s planning documents so it will be easy to find.
Estate plans can also include provisions for pets. In a comprehensive trust-based plan, pet provisions can provide money from one’s estate to a named caretaker. A client can also create a full-blown pet trust that names a trustee to manage the pet’s care with funds set aside specifically for that pet. A pet trust is fully enforceable by the courts, so a client can rest easy knowing their pet’s well-being is a priority.
