Why smart investors buy pet insurance
Smart investing isn’t just about making money (#gains). It’s also about protecting your capital from major losses. In the finance world, this can be done through a strategy called hedging. Hedging is when you buy or invest in something to limit the downside risk (potential losses) of another investment. That’s where hedge funds get their name - their goal is to generate outsized returns while minimizing downside risk, and they do that by hedging their portfolios. This can be done in a variety of ways, such as selling a certain stock while owning its competitor.
Hedging may sound like some complicated investing strategy, but the truth is that everyone does it. That’s right, YOU are most likely hedging, whether you know it or not. How?
Whether it’s health, auto, homeowners, life, or disability, insurance is the simplest, most common everyday hedge. You purchase an insurance policy to protect yourself (and your bank account) in case something bad happens, right? Hedge fund managers and other investors do the same thing. They pay a fee (the “policy premium”) to cover their a$$es in the event that their investments unexpectedly go south.
One particular type of insurance that no one really thinks about, though, is pet insurance. Yes, you can buy an insurance policy for your pet! It’s been an absolute lifesaver for us, and I highly recommend it for all pet owners. You never know what kinds of high vet bills you may incur in the future, and you don’t want to be faced with a nightmare of a financial decision.
About two years ago, my husband and I signed up to foster dogs with the local rescue agency. We really wanted a dog in our lives, but since we were planning to move overseas, we felt it wasn’t smart to take on such a big, new responsibility.
Then along came Ruger. He was our first foster pup and stole our hearts right away. So much for fostering! Our family adopted him almost immediately, and we wear our “Foster Fail” badges with honor.
When we got orders to move overseas, we decided to leave Ruger with my in-laws. While packing him up for his new temporary home, I stumbled upon an article online about pet insurance.
Pet insurance? That’s a thing?! After looking into it further, I realized how beneficial it could be. Ruger was already two years old. We had his basic vaccination records, but we were completely in the dark about any other potential medical issues. And of course, Google was no help. Just search “common medical problems for labrador retrievers” and you’ll see what I mean.
So I started researching pet insurance companies. After comparing plans, coverage, and deductibles, I decided to go with a company called Healthy Paws. They offered what I determined to be the best protection against potentially large vet bills in the future. For example, unlike most pet insurance companies, Healthy Paws will (subject to criteria) cover costs to treat hip dysplasia, a genetic issue that plagues many labs and other large breed dogs. I had no reason to be concerned about hip dysplasia at the time, but most labs I’ve known have developed serious hip issues in their senior years.
In true financial analyst fashion, I also crunched some numbers and analyzed the risk/reward profile of purchasing a policy. Ruger was 2 years old, most labs live until about 12 years old, so that’d mean about 10 years of coverage. The policy I was considering cost ~$35 per month, or $420 per year. That means that over the course of 10 years, we’d pay out ~$4,200 in insurance premiums for our boy. Not bad considering that major health issues like hip dysplasia, cancer, cataracts, etc can costs thousands, sometimes tens of thousands of dollars to treat.
I don’t know about you, but I’d gladly pay $35 per month for peace of mind and to protect my bank account from a multi-thousand dollar hit. So I signed Ruger up! My husband thought I was a little crazy (he’s dubbed me a “helicopter dog mom”). But guess what, it’s only been a year, and it’s already paid off in HUGE ways.
THOSE DAMN DEER
Ruger’s a very well behaved dog, especially on leash, except for when he sees deer. Then you better pray to the animal gods that he doesn’t drag you with him as he lunges in pursuit.
Unfortunately, that’s exactly what happened a few months ago, and it completely changed poor Ruger’s life.
In mid-May, our phone rang in the middle of the night. It was my mother-in-law, sobbing frantically, telling us how she took Ruger outside, he saw some deer, and yanked her to ground. To save herself from getting dragged, she let go of the leash and off he went. A short while later, he returned, limping tremendously. Once he laid down, he was unable to lift his hind legs back up. It was absolutely heart breaking.
The first thing that popped into my head? Healthy Paws. I told her to take him to the vet as soon as possible, and go ahead with any treatment the doctor recommended. I knew our policy covered most injuries so long as there were no records of previous issues. At most, we’d be responsible for our $500 deductible and 10% copay.
As it turns out, Ruger had fully torn his left cranial cruciate ligament (the doggy version of the ACL), and partially torn the one on the right. The specialist told us that his injuries would not heal on their own, and that he’d need to have surgery on both knees to function normally. The cost of each surgery? A whopping $4,000!
I called Healthy Paws right away. They said they’d cover both surgeries under our policy (whew!), so we went ahead with surgery to correct the left knee. A week ago, after his left leg had fully healed, he underwent surgery on his right knee. And in about eight weeks, he’ll be as good as new with very low chance of re-injury.
MY HAPPY BANK ACCOUNT
So how much are our vet bills for this very unexpected incident? Including X-rays, surgeries, medicine, etc, Ruger's little romp around with the deer has added up to (drumroll please):
WOOF! And how much is Healthy Paws covering? About $7,000, or 82% of the total cost. That’s incredible, especially considering that we’ve only paid about $500 in premiums since registering with Healthy Paws sixteen months ago.
For many of us, pets are members of our family. When something bad happens to them, we want to help, no matter the cost. However, not everyone can afford to pay for really expensive surgeries, and they end up being faced with a sad, horrible nightmare of a decision: rack up credit card debt to pay for the surgeries, or let their furry family member go.
That’s a decision I never wanted to confront, which is why I signed up for an insurance policy. And I am unbelievably grateful that I did. Thank you, Healthy Paws, for protecting our fur child and our bank account!
*Note: I have no affiliate relationship with Healthy Paws. I’m just a thankful customer who appreciates and rewards great products and customer service!