The Basics of Pet Health Insurance

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  • 0:01 Pet Health Insurance
  • 0:27 What is Insurance?
  • 0:52 Premium, Deductible,…
  • 3:26 Pros and Cons of Pet Insurance
  • 5:16 Lesson Summary
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Lesson Transcript
Instructor: Artem Cheprasov

Artem has a doctor of veterinary medicine degree.

This lesson will go over some important terms related to pet health insurance, such as deductible, premium, and coinsurance, as well as the pros and cons of health insurance for pets.

Pet Health Insurance

If you live in the U.S., then you almost certainly have health insurance. It's the stuff that helps pay your medical bills if you need to go see the doctor.

Pet health insurance has existed for a long time in the U.S. It's not as comprehensive, or all encompassing, as human medical insurance, but it can definitely help offset medical costs for owners. Here, we'll take a look at important terms and concepts related to pet health insurance.

What Is Insurance?

Insurance is, at its core, a system of protecting someone or something against future potential harm in exchange for payment that's proportionate to the amount of risk involved. Here's what that definition means. Let's say Tank, a dog, is a young and healthy pup. His owner, Peg, decides to insure him in case he gets sick later on. The insurance company tells Peg that it'll cost $25/month to insure Tank.

Premium, Deductible, Coinsurance

Peg has another dog called Rascal. Rascal is the same breed as Tank but several years older and with a pre-existing disease. Because the risk of Rascal falling ill with another problem due to his age and medical condition are higher than that of Tank's, his insurance premium will be higher.

The insurance premium is the monthly or annual payment an owner makes to an insurance company in order to maintain an active policy for their pet. The insurance premium is affected by more than age. It's also affected by things like the reproductive status of the animal, the species and breed, the location of the animal in the U.S., and the kind of insurance policy that's purchased.

What I mean is, if a policy has a low deductible, it'll probably have a higher premium, all else equal. A deductible is an amount of money you must pay out of pocket for health care services covered under your pet's plan before the insurance company begins to pay for these services.

Let's say that Rascal's deductible is $100. This means the insurance company will not pay any medical claims until Peg has paid $100 out of pocket in a given time period, such as a year, for Rascal's medical conditions that are subject to the deductible. I said subject to the deductible because some medical claims (fees/bills) are not covered by the insurance company and thus their amounts would not count towards fulfilling the deductible.

A pet health insurance policy will also have something known as coinsurance, which is the percent share of the costs of a covered health care service that the client is responsible for. Sometimes, coinsurance is referred to as copay in the veterinary world, albeit a copay is something entirely different in human medicine.

Anyway, let's say Peg needs to take Rascal in for the tenth time this year for a covered medical expense. Peg has already paid $100 out of pocket for the covered medical expenses and thus has met her deductible for the year. If her coinsurance percentage is 20%, and the next bill comes out to be $1,000 worth of covered services, Peg will only have to pay $200 out of pocket, and the insurance company will pay $800 of the bill.

Pros and Cons of Pet Insurance

Pet health insurance allows many people to afford medical care for their pets, and at least one study suggested that this would help decrease unnecessary euthanasia of animals as a result. It's important you know all of the terms above when talking about pet health insurance with clientele so they can make a sound decision about health insurance for their pets. There are many pet health insurance companies, with each one having their own twists to my definitions and examples we just went over.

Despite the many positives of having pet insurance for a pet, pet insurance companies often place a lot of lifetime limits, or caps, on the amount they are willing to pay for any given condition, or for a pet's entire medical expenses in general, so each pet owner should read their policy carefully as to how much the insurance company is even willing to cover in the first place.

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