Our pets deserve every opportunity to live full, healthy lives. For the most part, that means they will need to be looked after by a veterinarian or other animal healthcare professional, if only for vaccinations, check-ups and other routine care. With the costs of such services rising, many owners have turned to pet insurance to ease the financial burden.

In come countries, including the U.S., U.K., Canada and Australia, having pet insurance is commonplace. Sometimes, employers offer this kind of coverage as an employment benefit. They may even take care of the monthly premium on their employees’ behalf. For those who pay their own way, however, the key question is whether this sort of protection makes sense for them.

In making the determination, it helps to understand the options that are available. Generally speaking, there are three types of pet insurance: accident-only, accident-plus-illness, and comprehensive. The specifics of each policy tend to vary by provider, where the insured is located, and who (or what) is being covered.

Many pet owners maintain that accident-only and accident plus-illness coverage is the most cost-effective, because the veterinary services associated with accidents and illness tend to be quite expensive. Typically, these policies include coverage for emergency hospitalization, surgery, diagnostic imaging (e.g., x-rays, ultrasound, CT, MRI) and laboratory tests, with reimbursement rates varying by policy and insurer.

Others believe, however, that comprehensive coverage also represents good value, since our pets, like humans, are living longer than ever. As they age, the odds increase that they will eventually suffer from some sort of chronic condition, and insurance can help offset the cost of the associated out-of-pocket expenses. Depending on the policy, you may receive reimbursement for up to 100% of your pet’s veterinary costs.

With the above in mind, below is an overview of the pros and cons of this type of coverage:

Pet insurance pros

  • Value for money. As with all insurance coverage, the key to determining whether it is worth having depends on the amount of the premiums, what is being covered, and what will be reimbursed in the event something goes wrong. Of course, since the point of having insurance is to protect against the unknown, it is generally impossible to know for sure whether the economics are in your favor until well after the fact.

    Nevertheless, by evaluating different policies and companies, researching what financial and veterinary experts advise, scrutinizing what current and past policyholders say about their experiences, and taking account of your individual circumstances, including the age and breed of your pet and your available resources, you may find that having insurance represents a net positive for your wallet.

  • Peace of mind. Still, even if the longer-run benefits are difficult to ascertain, there is certainly something to be said for having a backstop or financial safety net that protects you against a major calamity, whether this refers to life insurance, flood insurance, or some other form of coverage. For many owners, pet insurance gives them peace of mind, which can have significant value in and of itself.

    The fact is, no matter how much you love your little ones, the prospect of facing large bills that may divert funds away from other necessities can leave you feeling conflicted and in a bind. When you have this sort of coverage in place, however, you will likely worry less about how you are going to pay for what needs to be done and focus primarily on returning your pet to good health.

  • Being prepared. Pet insurance can be a rainy day emergency fund, of sorts. In reality, many pet owners probably don’t have a cash cushion on hand for a sudden illness or medical emergency, which, as life would have it, often come about at the worst possible moments. For many of us, paying the monthly premium can be easier and more palatable than setting aside sufficient resources to cover the costs of care and treatment should the need arise.

Pet Insurance Cons

  • Unnecessary expense. As with any other type of coverage, pet insurance can potentially end up costing you a lot of money that you never get back. For those who face more pressing concerns or who are simply struggling to get by, paying out a fixed sum every month can seem like a bad bet on an improbable event. In some respects, this is true. Companies that offer this sort of coverage know from experience that only a small number of claims will likely be made each year. Even if one of them is made by you, you may also be faced with the prospect of covering a deductible or making co-payments for services.

  • Too good to be true? If you do decide to sign up for a pet insurance, the hard part may be finding a policy that really gives you the coverage you need. Online research might tell you which policies are the cheapest, but do they offer you the best bang for your premium buck? Super-cheap policies (and even some fully priced ones) may have various  exclusions, including for disorders that are common in certain breeds. You may not be covered, for example, if your purebred German Shepherd develops hip dysplasia, a common genetic ailment.

    In addition, the companies that underwrite this type of insurance often rule out  coverage for preexisting conditions, or may have waiting periods that apply before you can claim for some or any treatments. And even if a particular service is covered, they may force you to jump through hoops or leave you facing lots of red tape when you try to make a claim. Whether it comes to exclusions, waiting periods, filing claims or any other aspects of a pet insurance policy, you’ll want to read the fine print carefully before signing up.

  • Coverage limits. In some respects, pet insurance resembles dental (and certain other types of health-related) insurance. While you are are covered for various conditions, there may be limits on how much you will be reimbursed for a procedure or in any given period, or on how long certain, typically chronic, conditions will be covered. Moreover, while many firms that insure humans negotiate lower rates for services provided by in-network professionals, that is less likely when it comes to veterinary services. You may end up having to pay more out of pocket than you originally thought.

If you do decide to opt for pet insurance, bear in mind that most companies will only cover your expenses after the fact.  If your pet falls ill or requires other care, you will have to pay your vet or other providers when the services are rendered. A claim form will then need to be filled out and submitted to the insurer, along with invoices, for reimbursement. This means you may still need to have funds in reserve to address your pet’s immediate health needs should problems arise.

Regardless, many have found that there is much to be said for having a pet insurance as a safety net that protects them and their families. After you have weighed up the various pros and cons, perhaps you’ll feel the same way.