Insuring Against Irrational Pet Insurance Decisions

Our view or opinions of an outcome often retroactively determine the merits of the decisions we make. Deftly diving out of the way of a speeding car would logically seem to be a smart decision. Landing in the way of another oncoming car, in retrospect, takes smart out of the equation.

In either case you made the same decision in jumping out of the way of a speeding car. Its the outcome of that decision that dictates the apparent intelligence of the decision you made. Does that mean we’re all subject to fate in determining the virtue of our decisions? Not necessarily. Perhaps we should have looked before we leapt. To confuse things further, there’s another way of looking at things.

My father once told me that the value of a choice wasn’t simply apparent in the decision itself or in its outcome. Rather, one had to consider the thought that went into the choice in the first place. My evident confusion prompted him to expand on that.

He asked if I would be enticed by an offer that could earn me $50,000.00 in ten years for a meager upfront investment of only $5,000.00. The odds, he explained were only about 50% that I would hit that target and improved if I would be willing to accept a lesser return. I’d have much better odds of realizing $40K, for example. But regardless, the odds of my losing my initial investment were very small. Though I’d have to wait 10 years, I’d be virtually assured of getting at least my initial investment back. Was I interested? I was, but only if I had no other interests in mind for that $5K. My response wasn’t enthusiastic.

He then asked what I would do if he offered me obscenely slim odds to make $5 million dollars and all I’d have to invest is $5 for the purchase of a lottery ticket. I answered without hesitation that I’d hand over the $5 with hardly a thought.

He then deflated my confidence a bit by explaining I’d just made the same bad decision thousands of lottery ticket purchasers make every day. The mistake I was making being the failure to consider the odds in assessing the value of the investment simply because I was so impressed by the potential return relative to the amount I’d have to pay to get in on the deal.

But the point we’re trying to make here isn’t about gambling on lottery tickets or dodging oncoming traffic. What this article focuses on is the sometimes difficult choice we face when considering the value of purchasing veterinary insurance for our pets. If you’re in the market, you already know that it isn’t always a cut and dry decision.

As with the example of an investment vs. a lottery ticket, we struggle to make a smart decision when it comes to pet health insurance because we’re considering an investment in an unknown potential outcome. How will we feel spending hundreds of dollars each year if our pet never requires a costly medical procedure and, instead, dies peacefully of old age? Won’t we have made a bad decision and wasted our money?

Alternatively, we apply emotions to the choice. If we don’t get health coverage for our pet, does that mean we don’t love it? Are we wrong for assigning a dollar value to the health of our animal?

Both of these approaches are wrong. The first thought process is a waste of effort. You can’t know the future. Your pet may well never need a medical procedure. Perhaps it’s a particularly healthy breed. But even the healthiest of breeds can have accidents, eat something it shouldn’t have or be hit by a car.

The emotional approach is no better and, in fact, can blind you to important realities. All the love in the world won’t change your financial position if you can’t afford the monthly expense for pet insurance. I’d dearly love to buy controlling interest in Microsoft. That passion doesn’t translate to the financial ability to do so. Nor does the lack of finances mean you love your pet any less.

In deciding whether or not veterinary insurance is the smart choice for your pet, take a rational approach. Look at the facts. Should an expensive procedure be unexpectedly required, could you cover the cost out of your savings? Remember it could cost you thousands of dollars. Obviously, if you make a lot of money and are good at maintaining savings for emergencies then there’s probably no point in getting insurance.

Also consider your pet’s age and general health. If it is young and healthy, non-problematic breed then perhaps the choice to purchase pet insurance can be delayed until later in your pet’s life. Just remember the warning that emergencies can and do happen.

Before you invest in pet insurance, you should invest time into researching your particular breed and your financial circumstances. The peace of mind that comes with having health insurance for your pet is great but not if you can’t afford other necessities as a result. Factor in your job stability, savings account and your ability to sock away additional money over the next few months (and be brutally honest about your spending habits as you perform this analysis.

At the end of the day you should take the time to honestly analyze the relevant facts with no emotional bias. Do your research, consider your financial position and make the choice based on what makes sense rather than your fears and emotions. Leave it to the guys in Vegas to have fun riding emotional roller coasters while you content yourself in a rational decision honestly made.