Most of us think of our pets as part of our family. As such, we care for them when they are sick or injured as we would any family member. While we know that the human members of the family should have medical insurance, we may not think about it for our pets. That begs the question, should you obtain insurance for them? Well, it depends. Insurance is just one way to manage risk. Here are some tips for evaluating the decision.

Determine if you can self-insure. We decided to self-insure our dog when we found him 4 ½ years ago. Instead of paying $50 / month ($600 / year) for a comprehensive insurance policy, we put that amount into a separate pet account each month. The money in the account is used only for pet expenses. His bills have averaged $400 / year so I now have a cushion in the account. If something were to happen to him, I still have this savings that I can use towards another pet or unrelated expenses.

Decide if you would be prepared for larger costs. The automatic savings plan works for a fairly healthy pet without major expenses. If our dog had a serious illness or injury, our pet account funds wouldn’t have been sufficient. That is where the emergency fund comes in. An emergency fund is a pot of liquid assets or cash that is set aside for emergencies. These can include a disability or job loss. You could choose to also make this fund available for unexpected pet costs while you are getting started with your pet account. If you don’t have an emergency fund, insurance may be a better option for you while you create one.

Determine what your limits are. If you are willing to pull from savings for unexpected pet expenses, decide what your limit would be. You don’t want to be faced with an emotional decision with an already sick or injured pet. Would you do anything to save your pet even if it meant putting them through a painful, risky treatment that cost $10,000? You may not want to deplete your savings leaving you vulnerable to falling into debt.

Review insurance policy specifications and cost. As with all types of insurance, there are multiple tiers and limits on benefits. If you decide to obtain insurance, review the list of items covered, deductibles, copays, premiums and benefit maximums.

As more and more procedures and medications become available for pets, questions regarding pet insurance will likely increase. Self-insurance has worked for me. What has worked for you? Email me with your experiences: linda@planningwithinreach.com.

Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.

Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.