Tuesday, August 11, 2015

Sarah K (finally) nails one

This is one of the most difficult posts I've ever written.

No, not because it actually lauds frequent foil Sarah Kliff; for once, she gets it right.

No, here's the hard part:

A few months ago, we lost our beloved 13-and-a-half year old puppy to canine lupus. She fought valiantly, but in the end, the disease was just too much for her. Fortunately, we were in a position financially where we could afford top-notch treatment, and there was never any real question that we would do whatever we could to try to save her life.

Some (many?) folks aren't that fortunate, and can't afford to throw many hundreds or even thousands of dollars into care for their pets. Some of them buy pet insurance, about which we've written a few times [Full disclosure: there's a pet insurance ad in the sidebar]. But I've never really considered it a "must buy" like life or long term care insurance.

And neither did Sarah, until "Spencer ... a goofy, adorable 25-pound rescue beagle from West Virginia" adopted her. And in the past year, his medical bills have surpassed hers (almost $1700 since last August). Like me, Sarah was skeptical about the value of pet insurance, and so she set about researching it. What she found is quite interesting and in fact helpful if you're considering such a purchase.

But where she really shines is this insight:

"How much would I be willing to spend to save my dog's life?"

She notes that she initially treated this as a math problem (which it is), but that this is only partially relevant (again, very true). Comparing it to, for example, homeowner's or renter's insurance (as she does) yields only so much useful information. She ultimately grasps the most important insurance-related concept that it's not about the frequency of claims, but about insuring against the risk of a catastrophic loss.

Something she's never done, by the way, with health insurance.

I especially liked this quote, from Harvard economist David Cutler:
"My goal is to always put in more than I take out from insurance. I’d be blissfully happy if I never used my homeowners insurance." Filing no claims means that life is proceeding apace, with no unexpected disasters.
Sarah ultimately formulates the most important - and difficult - question one needs to ask when considering a pet insurance purchase:

"How much am I willing to spend to save my pet's life?' [emphasis in original]

That's a very different question, of course, than "how much can I afford to spend," and it's wise (and important) that Sarah brings it up. The answer will vary from person to person, pet to pet, of course, but the question bears consideration.

Sarah's article has some other interesting and useful thoughts on the subject and I heartily recommend that pet owners (and would-be owners) read the whole thing.

[Hat Tip: FoIB Jon B]
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