Insurance Math

wildlifecr13 · Posted: Wed Jul 23, 2008 11:29 am Post subject: Insurance Math

OK, Im doing the math on insurance here. I have this crazy thought that says that unless you end up with a really bad situation (which Ive had happen once, so I know it can happen again, spare me the lecture), you are better off taking your money and putting it in the bank than paying on pet insurance.
This comes from a simple realization that these people are making money off the fear of the unknown... like all insurance. Thus it becomes a calculated risk on your end to go without.... the question is, WHEN DO YOU BREAK EVEN?

An example, in April you pay $33 for insurance, get a $100 vet bill, and insurance refunds $75 of that. Your net is -$58. If you bank $33 instead and get a $100 vet bill, you lose $100, but you have $33 in the bank, so your out of pocket net is -$67.
May is quiet, so the insured dog is now at -$91 due to the monthly premium, the uninsured dog puts another $33 in the bank... now you have paid out $100, but saved $66 from the insurance, so your net out of pocket is really only -$44. The other $66 is on hold, and IF you get lucky and never need most of that money, then after your dog passes, you have money saved in case the next dog gets sick, and you could make a nice memorial contribution to a rescue group. You could also take payments from that fund, much like an insurance company would pay you, based on your vet visits... ie, figure a copay and then pull the rest from that fund.

The solution to my question here lies in the numbers... WHAT is the average payout versus premium payments over the life of a dog? We know that insurance companies make a profit or they wouldnt be in business. Simply playing the odds, which is what much of life is all about, your best bet is probably to pocket the money at the same rate you would normally pay insurance, and hope the gods smile on you.

Sorry for the dissertation, I just see insurance as preying on fear, and I think that there is a reason why companies are making money at insuring pets - the average person pays in more than they get back.

wildlifecr13 · Posted: Wed Jul 23, 2008 11:32 am Post subject:

i failed to mention - i just got my cost of living increase at work, and rather than splurge with it, im cutting back to deal with inflation, and putting that entire raise in the bank, where it can earn interest and be there if I ever need it. God willing, zoe has 6-8 good years in her still, and in that time I could build up as much as $9K in that account (depending on the interest rate).

peppernaei · Posted: Wed Jul 23, 2008 11:55 am Post subject:

I was a nanny for a family that owned a large insurance company (human life, medical and travel) and believe me what I learned made me very wary of insurance companies.

We have never insured any of our other dogs and have just scraped the money together as needed. This hasn't always been easy since we've had a bear attack, hip dysplasia, cruciate tendon replacement (both legs) and cancer but we've managed.

This time, we did decide on insurance on the breeders recommendations however our plan was only for the first two years to safeguard against costs due to puppy diseases, growth issues, period of eating everything. It will have cost us nearly $800 however we are closing in on the first year and we have only claimed $100 so far.

I'm not sure how much longer we will continue with it but I think we'll just put some extra money away for the future. Probably a lump sum when the hubby gets his bonus and a bit more each month in our high interest savings.

GailB · Posted: Wed Jul 23, 2008 12:46 pm Post subject:

We never break even.. Mad

...I call insurance companies "legalized crime". Laughing

PamK · Posted: Wed Jul 23, 2008 12:51 pm Post subject:

The math only works if you really put the $33 in the bank and it stays there. Many people (including me) say they will put the money in the bank but wind up spending it on something else.

wildlifecr13 · Posted: Wed Jul 23, 2008 1:12 pm Post subject:

Ive set up an auto transfer of the funds. So it really happens, like it or not. I figure its as important as someone else paying their pet insurance... if I dont have it and I need it one day, I will beat myself up quite a bit over it.

If you want to send me your money, i will charge 2% to hold it, and send it back when you need it. Very Happy

NenaGunther · Posted: Wed Jul 23, 2008 9:55 pm Post subject:

No long lecture...just some facts from our situation.

Simon - adopted at 1.5 years
Pet Insurance per month $34 = $1224 for three years
Simon gets really sick at 4.5 years
Bill at Vet $2300 - got back about $2000
Bill at Oradell $8000 - got back about $2600

Even if you have a superior plan, there is a $4500 max per incident.

Definitely worth it, but would rather have my dog Crying or Very sad

weim2mom · Posted: Wed Jul 23, 2008 10:26 pm Post subject:

I think it's a total waste. I did it for Chevy, I paid over $1600 last year on her emergencies. I got $325 back. And I paid $200 for a year's plan.

Never again.

wildlifecr13 · Posted: Thu Jul 24, 2008 7:00 am Post subject:

we would have paid about $1000 on insurance for Lola during the time we had her. her chemo, etc probably set us back $3-4K. if she had lived longer, then it could have been much more... which I would have happily paid.
there, the math would have probably worked, but I think that she is the exception to the rule (she always was the exception it seemed).
so, my first auto-transfer goes through tomorrow, and i begin saving my nickels on my own. will have to see where it goes from there.
praying for 2 healthy dogs for a good long while.

AnnaMM · Posted: Sat Aug 09, 2008 10:31 am Post subject:

I am going with the savings account. My 1st weim (@ age 8yrs) had to have knee surgery $1400.00, then a site infection $300.00. Last October she was diagnosed (blood test and symptoms) with pancreatic cancer. She turned 11yrs old in late October. Do I go for the $800.00 dog MRI, will I subject her to chemo? No I believe in the best quality of life she can have to the end. ( I do not make this statement lightly 3 humane family members have passed from cancer past 5 yrs ). She passed away in February in my arms at home she was 11 yrs 4 mos old. The last picture I took of her was 6 days before she passed catching snowflakes at night. So to the present, on June 18,2008 I became the the rescued humane companion to Em. She is a 7 month old blue female. We went on vacation last week to the north woods in Maine and developed bad haves. I started to remember puppy hood, the vet visits, and it got me thinking about the insurance issue. So I looked back and I don't think I ever paid more than $600.00 out in one year. I just added $100.00 to my savings account for the big stuff.