# Alternatives to Insurance?



## Muskeg (Jun 15, 2012)

I've done the math, and it doesn't make much financial sense for me to buy dog health insurance. Premiums would add up a lot each year, then there's deductibles, pre-existing conditions not covered, etc. 

Instead, I'd like to invest a set amount every month into an account that will accrue interest, but from which I could easily withdraw without tax penalties. I have no interest in playing around with the stock market, or any other risky ventures, just something that will grow slower but steady. 

I did this before, but didn't put the money in a place where it gained much interest. I want to be very mindful this time, so I can actually have the money set aside and growing. 

I don't want to get into the financial weeds too much here, just looking for some ideas of what others have done, and then I'll do my research. 

I have a credit card that I could use if there was an emergency bill, and then I'd want to pay that off from my "vet bills" account within the month. 

I'm curious what others have done, and how it worked out for you? I plan to invest about double what I would be spending on premiums each month, to start.


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## Craig Caughlin (Oct 17, 2007)

I would re-think your decision to not purchase health insurance.

If you insure a puppy and they develop a sickness that will require life-long treatment, your insurance premiums will more than pay for themselves in savings to you over the life of the dog! Case in point, I had a GSD that developed E.P.I. The typical E.P.I. dog needs, at a bare minimum, pancreatic enzymes, potentially B12 shots, etc., and those expenses will likely be far greater than your premiums. That's just one example. The same would be true for hip dysplasia, etc.

I've also been to a VCA clinic where a lady was holding her little Golden Retriever who had just done what puppies do, and swallowed a washcloth. I overheard the vet tell her they needed to operate within the hour to save the dogs' life and the cost was just shy of $5,000 for the surgery. He said they would, literally, have to open up the dogs' tummy to retrieve the washcloth, etc. 



Just my experience.


Craig


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## Muskeg (Jun 15, 2012)

Craig- You make a good point. It's just very costly to pay premiums with multiple large dogs of various ages if you don't chose a high deductible. If you do buy a more affordable plan that comes with a high deductible, then it won't make financial sense unless something horrific happens.

I don't think most insurance covers breeding associated costs, either. 

I have a spreadsheet I worked it all out on my other computer, after being hit with a $6,000 bill for a broken leg a couple years back (moose charged at us and kicked and broke a dog's leg). I can't remember off the top of my head what the totals were but I think vet bills would have to be in excess of $10,000 a year to make insurance pay off after deductibles and assuming insurance doesn't try to squiggle out of it arguing pre-existing, or etc.? Seen that plenty of times with human insurance. I looked at a few different plans that came with good reviews.

I think it makes a ton of sense to buy insurance if you just have one dog and you buy it when the dog is a pup! But my situation is a bit different.


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## MineAreWorkingline (May 2, 2015)

I don't do insurance, way too expensive. I have only had one dog in my life that I spent a lot of money on vet bills for cancer. He was given six months to a year without treatment. He lived one year with treatment, six of one and half dozen of the other. I would not do it again. It was very expensive and it was only to extend life, not cure the problem.

I keep a little nest egg for emergencies. I think putting the premiums in the bank is a good option. 

A wash rag went missing a couple of weeks ago. I assumed the dogs stole it and hid it somewhere. I found it in the backyard completely intact after passing through one of the dog's system, no damage done.


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## WIBackpacker (Jan 9, 2014)

I don't know if this is a *great* solution, but the best interest rate I've been able to find (without the sorts of constraints of a CD for early withdrawal/maturity dates and such) is a Money Market account at my local community bank. By agreeing to their maximum number of online/remote withdrawals/transfers per month (six), and some other somewhat restrictive terms, the interest rate is considerably higher than checking or traditional savings account options available locally. That MM account is intended to be a 'rainy day' fund, and ideally I'll have zero withdrawals, but if it's needed, there's no waiting period or penalty.

With my luck, even if I found awesome rates on a 6 month CD, I'd wake up the next morning and need all the money and lose all the interest that was accumulated, for early withdrawal.... in which case I'd have been better off leaving the money in a coffee can and sparing myself the headache on top of a headache. 

(I don't currently have pet insurance policies on my dogs, just my personal choice at present.)


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## dogma13 (Mar 8, 2014)

I'm with WIBackpacker regarding easy access and best interest rates.Interest rates are not great in general and at least mm accounts add interest monthly rather than quarterly.My husband is planning to retire next year and that's where we're socking away our emergency fund.


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## Craig Caughlin (Oct 17, 2007)

The other alternative to insurance, kind sorta, is to keep a dog healthy by proper diet.

I think most of the people who hang out here understand the link between diet and health, but I see a lot of people (as I'm sure you do) in my travels who think that "food" is all the same. I just shrug my shoulders and think..."Well, it's your dog...not mine."




Craig


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## tim_s_adams (Aug 9, 2017)

I recommend investing at least a portion of your fund in stocks and bonds through a good broker. I had upwards of 50K setting in a MM account, and was consistently disappointed at the pittance earned in interest, never more than a couple dollars per year. So finally, I took just 15K of that and gave it to my stock broker, with instructions to invest it in the lowest risk fashion they could. Over the next 8 yrs, that 15K made a minimum of 6% interest, and once over 9%! So that 15K made thousands, while the MM made less than $40. And even with the volatility in the stock market, the account never was anywhere near cutting into the principal invested. But if that's a concern, you can instruct to sell at a preset value...so it's pretty risk free, as long as you resist the broker's attempts to convince you to alter your risk tolerance, that is!

The key is selecting the right broker! Previously I invested 20K in stocks through my bank, and in a couple years had lost $2K from the account.


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## Magwart (Jul 8, 2012)

For this to work, you have to engage an automatic savings plan that sweeps money into a designated savings account at least monthly. DH and I are in the process of putting this together as an alternative to long-term care insurance -- but we have decades for the money to grow. 

If you do CDs, I would ladder them in 6-month intervals. What I mean is that you aim to put 20-25% of your fund into a CD at a time, so you have 4-5 different CDs, each one maturing a different month, and as one matures, you move into a new CD). The reason is that we're in a raising interest rate market period, so you want to be moving continually into new CDs as rates rise -- you don't want to be locked into a longer-term CD at current rates, as rates will be higher in 6 months. And higher still 6 months after that. You want to capture the rising rates. 

Laddering also ensures you have a little money available for expenses at the end of each month, if needed, without paying a lot of penalty fees. Right now TIAA has very good CD rates. Some credit unions and Internet banks do too -- but "good" is relative, as rates are still at historic lows.

With a dog, the biggest bills are often just 6-10 years away. That's too short a horizon for stock investing IMHO because it's not enough time to ride out stock market ups and downs for any one dog. However, over a lifetime of owning dogs, market investing could work. After you fill your emergency CDs, then I would consider shifting automatic savings into a low-cost, online brokerage account (First Trade is among the cheapest no-frills brokerages right now at around $3/trade; if you need a human to talk to, in a local office, ScotTrade/TD Ameritrade has good service for DIY investers who occasionally like to be able to ask a human a question, around $7/trade). 

Here's what I mean by using the market and doing index investing (buying the "whole market"): the market returned over 20% last year, so investing in ultra-cheap, brain-dead-easy Vanguard S&P Index Funds or ETFs (the cheapest of the cheap commodities) returned whopping gains. However, in 2008, the market lost 37%, so these same investors saw their accounts drop that much too. Over time, historically this flattens out into returns in the 7-8% range, and a little higher with dividends reinvested. So take the 10 year span from March 2008 (bad year) through March 2018 (good year), you ended up just under 10% returns with dividends reinvested. The key is that you need TIME though to get that historical return and ride out the bad years. 

You have time over a lifetime of dogs, but not any one dog (if a dog's vet needs force you to cash out of the market in a year like 2008, it would be really, really bad).

I recommend never, ever hiring a stock broker for investing. You truly don't need them, and you don't need to be a stock picker or compete with hedge fund pickers. Instead, read any book by James Bogle (his Little Book of Common Sense Investing and Common Sense on Mutual Funds are surely available at any library, as they're absolute classics) -- he shares the passive (EASY) investing strategy for the little guy who knows nothing about stock picking, that simply works for the longhaul, backed by decades of research and data. For what you describe, monthly or quarterly sweeps into a total market index ETF for around $3/trade could work pretty well, if the time horizon is at least a decade (or ideally even longer). Getting money out takes a few days for trades to settle, so this isn't the "might need it tomorrow" fund.


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## Sabis mom (Mar 20, 2014)

I have a credit card with a $1000 limit for Shadow. It is the only credit card I have. I used to deposit $50 a month into a high interest savings for vet bills($25 per pay cheque). It worked great for the most part, Shadow is fond of wiping out vet accounts though. 
Savings works well IF you have discipline. Be careful about anything locked in. If you need it quickly you might be out of luck, some banks can take up to 5 days to process and the penalties can be brutal.


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## Muskeg (Jun 15, 2012)

Thanks, Magwart, that's great info and gives me a good place to start! I know nothing about investing. I do have a high-limit credit card along with CareCredit for an immediate emergency. 

I don't even really know what a CD is... finance has just never caught my interest, but I will do my homework now.


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## wolfy dog (Aug 1, 2012)

I have insurance for both but mainly for my own peace of mind. It has paid for itself many, many times when there were unforeseen injuries that required several treatments.


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## Magwart (Jul 8, 2012)

Muskeg, another good, classic book for anyone trying to build some financial savvy is The Millionaire Next Door (available free online, as a PDF). I wish this one were required reading for young people.

It recounts years of research into how real, hardworking people become financially well off, and the author made astonishing discoveries about how many millionaires are hiding in blue collar neighborhoods, driving old cars, in homes where people never earned fat salaries or inherited wealth -- but were prodigious savers. It's a fun, inspiring read -- esp. the chapter near the end about the guy who sold his condo rather than live next to people who didn't like his dog!


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## eddie1976E (Nov 7, 2010)

My insurance premium for Remi went up 25% this year...it is crazy and I'm about to drop them...so fed up with the hikes. Not sure how they can justify that kind of increase. Guess they don't need to justify, I could walk away. PetPlan is just as bad as human insurance companies now. I would never recommend them. My premiums have gone up close to 50% in 2 years. 

If you do decide to get insurance, I would go with Healthy Paws over petplan.


If you want to invest $ in the market, and have easy access to it when you need it, I would stick with funds that are geared toward retired people who need low risk investments and quick access to their money since they don't have income. I personally wouldn't put $ in the market that I may need fast, you never want to be in a position where the market has dropped 40% and you need your $ to pay the vet the next week.


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## LuvShepherds (May 27, 2012)

If you have insurance and your dog has a vet bill which isn’t covered, you are out both the insurance money and the cost of treatment. There are many restrictions they can use to get out of paying. Save the money until you need it and don’t spend it.


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## MineAreWorkingline (May 2, 2015)

Magwart said:


> Muskeg, another good, classic book for anyone trying to build some financial savvy is The Millionaire Next Door (available free online, as a PDF). I wish this one were required reading for young people.
> 
> It recounts years of research into how real, hardworking people become financially well off, and the author made astonishing discoveries about how many millionaires are hiding in blue collar neighborhoods, driving old cars, in homes where people never earned fat salaries or inherited wealth -- but were prodigious savers. It's a fun, inspiring read -- esp. the chapter near the end about the guy who sold his condo rather than live next to people who didn't like his dog!


That was a great book! I read it so long ago! They said the most popular vehicle was a Ford pick up and they lived in middle class neighborhoods. It spoke about how they financed their adult children so they could live in those houses that most of us wonder what kind of jobs people had to live in places like that!


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## Muskeg (Jun 15, 2012)

Just a follow up.

I did the math with PetPlan. Their recommended plan is a monthly fee based on age and breed, a $300 annual deductible, and 80% coverage up to $15,000 a year.

My vet expenses last year totaled around $2,692- had a one big bill but it probably wouldn't have been covered. Most of my dog's bills were under $350 a year, and one had no vet bills. 

My deductibles would have totaled $4,408 for the year. 

This may take some math here. But if I was so inclined I could create an equation that would calculate how high my vet bills would need to be for each dog and for all my dogs in order for me save money. Taking into account the annual deductible that would total $1200 if all may dogs went over the $300 limit in vet bills. Also the 80% coverage. 

Eyeballing it, vet bills would need to be over $5,000 for one dog in order for my coverage to pay off (if I insured all my dogs). I feel like if I chose to only insure the younger dogs, the older one would get sick, just because that's how things work.


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