What you need to know about life insurance for pets

Life insurance for dogs and cats? Does such a product even exist? 

Life insurance for pets appears to be a far-fetched concept. No matter how much we adore our pets, if they die, few of us will require an income replacement benefit, which is the primary purpose of life insurance.

Pet insurance is, however, available. While not as common as human life insurance, you can buy life insurance for your fluffy friend if you so desire.

But the question is — should you get life insurance for your pets? It depends. 

Most pet owners do not require pet life insurance. If you have a show dog, a celebrity pet, or a rare breed, you should consider pet life insurance. Keep in mind, however, that pet life insurance is not the same as human life insurance.

How is Life Insurance for Pets Different from Life Insurance for Humans? 

Most people purchase life insurance to protect their family's future after they pass away. If you die unexpectedly, the proceeds from your policy can assist your loved ones in covering costs such as: 

• funeral costs
• mortgage installments and other debts
• college tuition fees.

Ideally, the death benefit is enough for your family to maintain their standard of living after you are gone. While they grieve your death, a life insurance policy can ensure they do not suffer any financial hardships.

Pet life insurance, however, works differently. Unless you have a pet that works in show business, you will not need replacement for future income. (Think breeding fees and product endorsements.) That is why most pet life insurance plans do not include an income replacement benefit. Instead, they only cover the pet's purchase price or the cost of replacing your pet.

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Limitations of Pet Life Insurance

Typically, pet life insurance only covers unexpected deaths, such as those caused by a sudden illness or an accident. The insurer will pay you the replacement cost or purchase price of your pet. If you pay more, the insurer may also pay for your funeral expenses.

Your pet’s policy does not cover all fatalities. The following are common exclusions in pet life insurance:

• Hereditary diseases: Certain genetic diseases are more common in purebred dogs. These illnesses are typically not covered by insurance companies. For example, if you own a Lhasa Apsos and it dies as a result of kidney disease — a health condition to which this breed is predisposed — you will most likely not receive the payout.
• Existing medical conditions: Before issuing a policy, the insurer will request that your pet undergo a health examination. If the health exam reveals that your pet has a serious health condition, whether genetic or not, the insurance company may refuse coverage or approve it with exclusions.
• Old age: Pet life insurance does not cover death due to old age. 

Should you consider pet life insurance to cover funeral costs?

Pet burials can cost anywhere between a few hundred dollars to several thousand dollars. If you choose a memorial headstone and gravesite maintenance, your burial costs will rise even more. You may be wondering if you should get life insurance for your pet at all?

While pet funerals can get expensive, pet life insurance comes with too many limitations to make it a good financial decision for most pet owners. Life insurance for pets is typically only paid out in the event of an accident or a sudden illness. Due to these constraints, purchasing a pet life insurance policy primarily to cover burial costs may make sense for only a small number of pet owners.

How much does pet life insurance cost?

The cost of pet life insurance depends on many factors. They include: 

1. Age and Breed 

The older your pet is, the higher the insurance cost. That is because older pets are more likely to die from a sudden illness. Your pet’s breed will also impact the premium rates, especially if you are buying life insurance for a dog. For example, premiums for purebred dogs may be more than those of mixed breed, since purebreds are more prone to genetic disorders. 

2. Current health

Pet life insurance policies are more affordable for healthier pets. If your pet has a serious medical condition or a number of minor illnesses, insurance companies may refuse your application for coverage.

3. Replacement income benefit

Would you suffer financially if your pet were to pass away suddenly? If this is the case, you will require more coverage and, as a result, will have to pay higher premiums. Pet life insurance policies that provide future income replacement (for example, from breeding fees and product endorsements) are more expensive than those that only cover the cost of replacing the pet.

4. Pet’s replacement value

Most pet life insurance policies pay the pet’s replacement value. For example, a Canadian Eskimo Dog (average price: $8,750) will cost more to insure than a Labrador (average price: $1,000).  Some insurance companies pay a pet’s purchase value rather than its replacement cost. It all boils down to the same thing: expensive breeds are more expensive to insure.

5. Pet burial cost

By default, pet life insurance plans may not cover the cost of a funeral. You will pay more for coverage if you want the policy to cover your pet's final expenses.

How Pet Life Insurance is Different from Pet Health Insurance

Pet life insurance pays out in the event that your pet passes away. A health insurance policy, on the other hand, assists you in covering medical bills if your pet becomes ill or is injured in an accident.

Pet health insurance is more common than pet life insurance. It's easy to see why.

Having a pet can be costly. In addition to having another mouth to feed, there are also medical bills. No matter how well you care for your dog or cat, it can become ill or injured, costing you hundreds or even thousands of dollars. According to some estimates, the annual cost of owning a pet can reach $2,000 per year.

Pet health insurance can help you manage the financial aspects of pet ownership by covering 80% or 90% of veterinary bills (after your policy's deductible has been met). Some plans even pay the remaining eligible medical expenses in full.

A deductible is the fixed amount of money you pay for covered veterinary services before the insurer pays all or part of your expenses. For example, if you purchase pet health insurance with a $500 deductible, you will be covered for 100% of eligible vet expenses up to $500. Following that, the insurer will pay all or part of the eligible expenses. The lower the cost of pet health insurance, the higher the deductible amount.

Pet life insurance policies, on the other hand, do not have deductibles.

What Does Pet Health Insurance Cover?

If your pet becomes ill or injured, pet health insurance will cover any unexpected vet bills. After you have met the deductible, the insurer reimburses 80%, 90%, or even 100% of your medical bills, depending on the terms of your plan. 

If you decide that pet health insurance is right for you, don't put it off. 

When your pet is young and healthy, the premiums are the lowest. Each year you put off purchasing a policy may result in a significant increase in insurance costs.

Most pet health insurance policies cover:

• unexpected illnesses (gastrointestinal issues, glaucoma, skin allergies, and more)
• accidental injuries (bite wounds, broken bones, and more)
• dental illness (tooth resorption, gingivitis, periodontal disease, and more)
• chronic disease (heart conditions, arthritis, diabetes, and more)
• diagnostic testing
• cancer diagnosis and cancer treatment
• surgery.

In addition to these, some plans reimburse other costs as well to make caring for your pet more affordable. They include: 

• alternative treatments such as chiropractic care, acupuncture, and physical therapy
• breeding expenses
• pregnancy expenses
• behavioral modification therapy
• euthanasia
• burial costs
• vacation cancelation fees.

These policies, for example, do not typically cover pre-existing medical conditions. If your Labrador is diabetic, the insurer will almost certainly include this condition on the exclusion list. However, if the symptoms do not reappear during the waiting period, an insurer may agree to cover curable medical conditions after a waiting period.

Aside from the pre-existing specific health conditions, other common coverage exclusions include:

• cosmetic procedures
• pet supplies
• elective surgeries
• daycare or boarding
• personal liability claims
• pet property damage
• vaccinations
• wellness examinations/routine care
• preventive care.

Conclusion

Pet life insurance is a financial product that pays out a benefit in the event of your pet’s death. However, it usually comes with a number of exclusions, making it suitable for only a small percentage of pet owners. If your pet works in the entertainment industry or is a rare breed, you should consider life insurance. Otherwise, pet health insurance, which covers vet bills for illnesses, accidents, and injuries, will most likely suffice.

Dundas Life can assist you in determining your pet life insurance and/or pet health insurance requirements. We will also assist you in locating the best coverage at the most affordable price.