Why We Buy Pet Insurance

When you're young, it feels like you have a lot of hard decisions in life.

Should I ask her out? Should I study for this test or hang out with my friends? Where should I go to school? Where should I go to work?

Fortunately, they're important decisions but they're not hard.

There are few “wrong vs wrong” situations.

Once you get older, the decisions get much harder. You are forced to make decisions with imperfect information that will not improve. You must decide between the lesser of two evils, which on its own my be a pretty awful evil if not for the other eviler evil. And you do all this without every knowing if you chose the right one.

That's why, to the extent that we can, we pay for things that can remove these difficult decisions.

That's why we pay for pet insurance.

This photo was closer to when we adopted him, in 2009
This photo was closer to when we adopted him, in 2009
Meet Tobey — he's our 14 (or 15) year old Beagle that we rescued about six years ago. I say 14 or 15 years old because we don't know how old he is. Some of his paperwork implies 15, the shelter said he was 14, we just know he's old and old dogs have maladies.

He's a pretty good dog, keeps us on our toes, and his floppy ears are always fun. He's a little cranky in his old age but still barks like a champ. Our kids love him, even though our daughter is mildly allergic to him (and me too probably!).

There's a very specific reason why we have pet insurance. It may not be what you think...One of the nice things about our financial situation is that if Tobey gets sick, or perhaps needs an operation, we can afford it.

You may think that's a good thing — it's actually not a good thing.

If your dog gets sick or needs an operation and you cannot afford it, there's no hard decision. The result sucks but you didn't make that decision, circumstances did. If saving your pet required you to go into debt and borrow thousands of dollars, there are few people in the world that would question your “decision.”

When you do have the means, it's a much harder decision.

If I have three thousand dollars in an emergency fund and Tobey needs a $3,000 operation, do we pay for it? He might only have a year or so with us and the operation may not improve his quality of life. It's also $3,000 we don't have in an emergency fund for something that might happen to one of us, or our car, or our house – or to another loved one.

I don't want to have to make that decision so I've decided to pay money today to avoid it.

That's why we buy pet insurance – it's one less hard decision I have to make.

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About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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  1. Kate @ Cashville Skyline says

    This makes sense, Jim. Thankfully, I’ve never had to make a choice like that. But my parents went through it with our dog and cat. We have an older cat now. Maybe I should look into insurance.

    • Jim Wang says

      It’s one of those “problems of the 1%” (in this case, maybe expanded to the 10%) because we have the financial ability to do it.

    • Jim Wang says

      Because the hard decision is still there. Even if I were to self-insure (save the premiums in an account), when it came time to decide I/we would still have to decide.

      • Michael says

        But if the money was earmarked for this type of situation, what’s changed?

        If the quality of life won’t improve, would you still use pet insurance to keep the pet alive, even though it may be be a happy life?

        Ultimately, if you make the choice to let go of the pet, then that money can stay in that account for your next fur baby’s adoption fees, training, etc.

        • Jim Wang says

          Just because it’s earmarked doesn’t mean it’s automatic — the decision is still there. And a tough one.

  2. Alex says

    I agree with this hidden “psychological” barrier and setting the decision ahead of time.

    For myself, I have a $6,500 deductible health plan which means the first $6,500 is out of my checking account.

    I do have the savings set aside, but
    I still struggle because it still requires YET another decision. This is the story I tell myself as it possibly could be taking from another savings goal.

    When my Doctor requested a scan be performed before a scheduled procedure, I found out the out-of-pocket is $1,200 for the scan and $7,500 for the procedure.

    Definitely a decision I spent days struggling with… And definitely something I will re-visit after reading this post, and this is for my own personal health !

    Hope this is helpful to the community. Thanks Jim.

    • Jim Wang says

      That’s tough… but if the procedure would blow through your deductible I suppose the scan is just whatever your co-pay percentage is. These are tough decisions and in this case it’s YOU.

  3. Lazy Man and Money says

    This may sound terrible, but I want to take this a step further. You can save Tobey’s DNA and clone a new Tobey-ish dog.

    I’m not joking. I wrote about this a couple of years ago – Clone Your Dog?

    The cloning process at the time I wrote was expensive… $100,000 and is likely the same price today. Saving the DNA is $1500 or so, plus yearly storage fees.

    The hope is that it becomes cheaper to clone a pet in the future.

    Now that I’ve gone off on the deep end on that… I have to ask what it costs to insure a 14 year-old dog. I think when Jake got to around 3, they said he wasn’t eligible by many insurance companies. That wasn’t because of any health conditions, but it seemed more like a limitation on buying an extended warranty (which is a cold way of referring to any living being).

    • Jim Wang says

      I don’t know the exact cost but it turns out that the premiums seem to cover the costs given how often we visit the vet in his elder years. It’s about break even the last time we priced it out.

      As for cloning, our daughter is mildly allergic to dogs so Tobey will be our last for a while. πŸ™

  4. Michelle says

    We don’t have pet insurance, but we are thinking about adding it soon. Both of our dogs are seniors now, which makes me so sad to think about πŸ™

    • Martha says

      I’d look into it sooner than later since the price will go up by bigger jumps each year if it’s a new policy. If it’s an existing policy I’m able to negotiate down the premium by explaining that we have been loyal customers, etc. Good luck! Senior pets require special amounts of care.

  5. Addi Ganley says

    Thanks for the post. We actually just got another puppy in our house and this makes me think about getting insurance for her now. We already have a dog and just recently lost a dog so we have been spending quite a bit at the Vet lately and yes I would pay my last dime if it meant helping my dogs.

    • Jim Wang says

      It’s not the most “frugal” thing… but neither are operations. If I’m willing to pay for the operation, I should gladly pay for the insurance. πŸ™‚

  6. Centsai says

    It is always so hard to have to choose between paying for a possibility of a real life crisis or a possible surgery for your beloved pet that has become such a valued part of your family. No one should ever have to make that decision, and I completely agree that everyone should pay for pet insurance!

    • Jim Wang says

      It’s always tough to make those decisions too! There’s no right answer… So avoid the question if you can. πŸ™‚

  7. Rajkumar says

    This post is really informative and reminded me of my pet which I lost 2 months back. It is real hard to make decisions in real life when applying for pet insurance as it creates a bad vibe in minds of losing something which is precious in our life. But now I’m feeling I should have gone with pet insurance as it can financially gives a little comfort. One should not consider it like valuing our pets lives. But it is definitely necessary.

    • Jim Wang says

      This is the same reason why people don’t like thinking about estate planning and life insurance. If you don’t think about it when you’re calm, it’s much harder to make decisions when you’re forced to and potentially panicking (or at least emotionally charged).

  8. Penny says

    Hi Jim,
    I was on here looking for an article you wrote back in Oct 2018 about remembering to request specialty consumer reports annually too, I had printed it and saved the article and came back on to find the links since you named them but sadly when you print an article with a link, it doesn’t show the name of the web page exactly. I’ll try to find them but realized you have no archived pages or search feature on your page.
    Glad I found your pet insurance article here, honestly, I hadn’t considered it but now that our girl is 7 I think we will. FYI, there are SEVERAL breeds of dogs who won’t cause any allergies. We have a Yorkshire Terrier (yorkie) and I have to say, after 12 years of cleaning wads of fur at a time up seemingly daily from our prior dogs, she has been a Godsend! No shedding, no allergies…I don’t know what it is but I had read that Poodles and Yorkies don’t give off the dander or something like that and don’t shed and it is ABSOLUTELY true. Also, they are incredibly smart, practically trained herself for both potty pads and outdoor and loves a bath, great with kids.

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