To insure or not to insure, that should be the question

Great Article on the snarls of pet insurance. Americans will spend near $41 billion on their pets this year, according to the American Pet Products Manufacturers Association. Of that, about $10 billion is for veterinary care. Generally, consumer advocates aren't fond of pet health insurance, 84 percent of which is for dogs. Consumer Reports published a quick take in its July issue. In an article titled "Why Pet Insurance is Usually a Dog," the magazine cited the deductibles -- the portion you pay before insurance kicks in -- and the list of procedures that many pet insurance policies exclude. As a result, you could pay far more money for pet health insurance than it will save you. Some considerations: MATH. With a fixed monthly insurance premium of $30 and a 12-year lifespan for a dog, for example, you would pay $4,320 in insurance premiums from birth to death. And if you don't pay extra for a fixed rate your premiums could increase each year as your pet ages. That's a lot of money if you have a healthy pet and receive very little in reimbursements. But you will make out well with insurance if you are reimbursed for a big-ticket vet bill before you have paid much in premiums. Many people who buy pet insurance aren't upset if they don't file large claims to make the math work, said Loran Hickton, a spokesman for Pets Best Insurance. It's similar to not being upset about not using a child's health insurance. "The value is what-if. The value is not what you use," he said. SELF-INSURING. If you instead set aside $30 a month in an earmarked "Fido-gets-sick" account earning 5 percent interest you would accumulate almost $6,000 before he died, assuming you did not need to tap the fund. Stephens says self-insuring is an option, but he contends that most people won't do it. "It sounds good, but most of us aren't disciplined enough to maintain it," he said. And self-insuring doesn't work well if you have a large veterinary expense before you have saved much in Fido's fund. DEDUCTIBLES, CO-PAYS AND MAXIMUMS. A number of factors reduce the amount the insurer will reimburse you. Most plans feature $50 or $100 deductibles per ailment. Some pay 80 percent of the vet bill, while you pay 20 percent, after the deductible. Most have lifetime maximum payouts and per-ailment maximums. BENEFIT SCHEDULES. Most insurers have benefit schedules that dictate the maximum amount they will reimburse for each diagnostic test or treatment, regardless of what your vet charged you. For example, imagine your dog was attacked by another dog and needed treatment for bite marks. VPI, the nation's largest insurer, would pay at most $275, $131 and $95 for various portions of the diagnosis and treatment of multiple bite wounds, for a total of $501, according to its "Superior Plan" benefit schedule. It would not matter if you had to pay the vet more, you would not be reimbursed for any more than those limits. EXCLUSIONS. Insurers typically exclude pre-existing conditions from coverage. So to have an ailment's cost covered you have to buy pet insurance before a problem develops. That means buying coverage early in the pet's life. And basic pet insurance does not pay for general wellness exams and routine care, such as vaccinations and neutering. Pet insurance can be expensive and, like most insurance, complicated. A disciplined consumer might be best off self-insuring. But if you think pet insurance might be for you, ask your veterinarian which insurers other clients have had good experience with. And become familiar with the details of policies you are considering.