Risk management should be part of everyone’s financial plans. Most of us manage risks by getting basic forms of insurance, such as health insurance, life insurance, and automobile insurance. This way if some catastrophically expensive bill or loss comes our way, there’s money there to take care of it and thus we don’t become destitute. There is a point where the cost of the insurance isn’t worth the benefit you receive. For example, there’s no reason to buy volcano insurance if you live in Kansas.

Other types of insurances fill a legitimate and relatively probably event that one might want to insure against, but the cost of the insurance relative to what you receive just makes it not worth it in almost all cases. Dental insurance is a great example of this. What about pet insurance? Does it make sense to insure against expensive bills at the vet and other damage that your companion could create?

Pet insurance has been growing in popularity by rates of 25% year. There’s over $250 million in premiums being paid each year! Although these numbers are quite high and increasing at a staggering rate, chances are it doesn’t make sense to insure your pet with a few exceptions. If you have young pets that are just a couple of years old and are perfectly healthy, chances are you won’t ever make good use of the insurance until your pet becomes relatively old for its species. Instead it might make sense to put that premium you would pay to pet insurance into a savings account and then use that money to pay for veterinary bills if they come up.

If you have an older pet that has a history of medical problems, then pet insurance starts to make sense. There’s no health screening for pets as there is with humans, so just about any pet can get insured. Pet insurance then becomes a great deal if you know for a fact that your pet will be visiting the vet a few times a year to have some sort of medical issue taken care of.

Buying pet insurance is a lot like buying an extended warranty on a vehicle of piece of electronics, however with pets you have a better idea if you will actually need to use the insurance or not. Extended warranties only make sense when you know for a fact there will be issues down the road, but in most cases they just aren’t worth it. If your pet is young and healthy, don’t bother with pet insurance. If your pet is older and has to visit the vet a few times a year or more, then pet insurance is a good buy.



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