Kamaron McNair at CNBC wrote about keeping her pet insurance after a $6,000 emergency vet bill that the policy only partly covered, and asked two planners how to decide whether coverage is worth it. I have three dogs, so this one is personal.
My view is that the decision is less about monthly premiums and out-of-pocket savings, and more about your overall financial situation. The real question is: could I write a four-figure check tomorrow without raiding money I need elsewhere? If the answer is yes, and you have the savings or disposable income to absorb a large vet bill comfortably, paying a premium every month for coverage you may never use is a reasonable thing to skip. If the answer is no, and a $6,000 bill would go on a credit card or come out of the emergency fund that protects your mortgage payment, insurance is doing real work for you.
That framework applies to a lot of small insurance decisions, from extended warranties to phone protection plans. Insure the losses you cannot absorb. Self-insure the ones you can.
It may only take one emergency to prove which category you are in. Better to decide with a calculator than at the emergency clinic.
Read the full article at CNBC →
