Pet Insurance vs. Pet Savings Accounts: Which Is Right for You?


Ru Chen

- Updated June 15, 2024

Key Takeaways

  • Pet insurance offers better protection against large, unexpected vet bills
  • Pet savings accounts require discipline but have more flexibility
  • Savings accounts can grow over time
  • Pet owners should assess their individual needs
Pet Insurance vs. Pet Savings Accounts: Which Is Right for You?

Pet owners need to account for both routine vet expenses and potential emergencies. Vet expenses can easily cost thousands of dollars upfront, posing a financial challenge for many pet owners. Pet insurance plans and savings accounts are two ways pet owners can prepare for expensive vet bills.

Let’s go over how pet insurance and pet savings accounts work, including how to determine the better option for you.


Understanding Pet Insurance

Pet insurance is a financial protection policy that reduces how much pet owners need to spend on veterinary bills. After paying for an eligible expense, you can file an insurance claim and obtain a reimbursement.

To obtain coverage, you will need to pay a monthly premium. The premium of a pet insurance policy will depend on numerous factors, such as your pet’s breed, age, and current health.

Types of pet insurance coverage

Pet insurance coverage varies depending on your chosen insurance provider and policy. Here are the main types of insurance for pets.

Accident-only pet insurance: Covers vet expenses related to emergencies. Common claims include broken bones, toxic ingestion, and lacerations.

Comprehensive pet insurance: Covers a wide range of veterinary expenses, including both accidents and illnesses. Commonly covered illnesses include cancer, diabetes, and arthritis.

Wellness plan: Preventive care pet insurance is typically sold as a separate insurance product or add-on. A wellness plan will cover routine expenses such as annual wellness exams, dental cleanings, and vaccinations.

Pros and cons of pet insurance

Pet insurance can potentially save pet owners thousands of dollars in pet care. It can also provide peace of mind to owners so that they know in case of a covered pet incident, they will be able to afford the medical care that their pet needs.

The main benefits of pet insurance include:

Coverage for urgent vet bills: It’s scary and stressful when pet owners need to deal with pet emergencies. Be that a broken bone, an abrupt sickness, or a chronic condition, a veterinarian needs to provide proper diagnosis and treatment. These emergency vet fees can cost thousands of dollars, quickly draining your savings. Pet insurance allows you to circumvent this by reimbursing you a significant amount of the eligible vet expenses.

Predictability: The pet insurance premium will stay the same, making it easy to budget for insurance coverage. Even if the premium goes up upon renewing the contract every year due to your pet aging, pet insurance premiums are typically predictable and stable.

Peace of mind: Having insurance can help alleviate your financial concerns, allowing you to focus completely on caring for your pet. Even if your pet falls ill or gets injured, the right pet insurance policy can greatly reduce the overall vet expenses.

Pet insurance can have its downsides. Here are the potential disadvantages of choosing pet insurance over a pet savings account.

Less flexibility: The money you pay as a pet insurance premium is lost and cannot be returned even if you don’t end up filing a single insurance claim.

Deductibles and limits: Even with pet insurance, you may still need to pay out-of-pocket expenses. If you only need to visit the vet for a low-cost service, you may not reach the deductible to be eligible for a claim. If your vet expenses exceed the limit, insurance will no longer cover the rest.

Choosing a reliable pet insurance company can go a long way. Some of the best options include Pumpkin, ASPCA, Lemonade, and Embrace. These providers offer varied policies for pet owners to choose from, allowing for tailored insurance and fast coverage.

Exploring Pet Savings Accounts

Definition of pet savings accounts

A pet savings account is an alternative to pet insurance. You can put money into a savings account specifically for your pet’s needs. Most pet owners who open up a pet savings account will only draw money out of it in case of pet-related emergencies.

How pet savings accounts work

After opening a pet savings account, you can set aside a dedicated amount of money every month. This money will be designated for veterinary costs, such as medical services, preventative care, prescription food, medications, and emergency vet visits. Some people choose to use pet savings account money for only emergencies, whereas others will use the money for routine expenses (e.g. pet food).

Pet savings accounts may come with interest, allowing you to accrue value over time. Pet savings accounts are considered a long-term strategy of saving money for your pet’s potential medical needs.

Benefits and limitations of pet savings accounts

Control: With a pet savings account, you can have better control over how much money you save up for your pet care expenses. You can use the money for a wide range of expenses related to your pet, even pet food, treats, and toys.

Potential growth: If you opt for a pet savings account, you could steadily accrue interest over time. This interest and lack of premium can help you grow a healthy savings account for pet expenses that you would otherwise not gain with insurance.

On the other hand, a pet savings account does come with downsides.

Inadequate protection: If you don’t save up enough in your pet savings account, the lack of pet insurance means that you could potentially be unable to afford life-saving pet treatment. Some surgeries and long-term treatment plans can cost well over $10,000 in vet bills. If your pet savings account has not accumulated enough funds, your pet could suffer as a result.

Financial diligence: To maintain a healthy pet savings account, you will need to regularly deposit money into the pet savings account without spending it for other needs.

Tips for effectively utilizing pet savings accounts

Here are some tips to keep in mind if you plan to open up a pet savings account.

  • Start early and save consistently
  • Set clear goals and plan for emergencies
  • Choose a high-yield savings account to maximize interest earnings
  • To avoid eroding savings, choose an account with few or little fees
  • Factor in routine pet care expenses
  • Regularly review your savings goal and monthly contributions

Factors to Consider When Choosing Between Pet Insurance and Pet Savings Accounts

Financial considerations

  1. Monthly premiums vs. regular contributions

A pet insurance policy requires you to pay monthly or annual premiums for active coverage. Pet insurance costs on average $28 a month for cats and $49 for dogs.

On the other hand, a pet savings account allows you to periodically make contributions with less stress. Pet savings accounts allow you to make regular contributions of your choice every month. Most accounts require you to have a minimum deposit or amount in the account.

  1. Deductibles and copayments

A pet insurance policy usually comes with a deductible that you can choose. This is how much you will need to pay in out-of-pocket vet expenses before pet insurance coverage kicks in.

Depending on what insurance policy you choose, you may need to consider the co-pay. The co-payment is the amount you need to pay alongside your insurance after you have already reached the deductible.

  1. Coverage limits

Pet insurance usually comes with an annual coverage limit. If your vet bills exceed this amount, the exceeding amount will not be covered. Most pet owners choose an annual insurance coverage limit of $10,000.

Health factors

Age: If your pet is young, it may make sense to obtain a pet savings account. A pet savings account with a solid yield rate can help you accrue interest and gain value over the life of your pet. When the time comes to pay for vet expenses, there will likely be sufficient funds in your pet savings account. On the other hand, pet insurance may make more sense for older pets, since a savings account might not contain enough to cover pet expenses.

Breed: The breed of your pet can affect whether they will be covered by pet insurance. Certain breeds with higher risks of inherited health conditions may be excluded from coverage, making a pet savings account potentially a better choice.

Health status: If your pet has pre-existing diagnoses, these health conditions may be excluded from a new pet insurance policy’s coverage. In this case, you may benefit from a pet savings account.

  1. Pre-existing conditions

A pre-existing health condition refers to any diagnosis that has been made for your pet before you obtain a pet insurance policy. Generally, pet insurance policies will exclude pre-existing health conditions, which means any treatment costs for them will not be covered.

  1. Likelihood of needing veterinary care

If you know your pet is more prone to injuries and illnesses, a pet insurance policy might be a better idea. Insurance can be much more worthwhile since it could save you thousands of dollars. On the other hand, a pet savings account could be quickly depleted in case of frequent visits to the vet.

Personal preferences and lifestyle

What is the optimal choice for you may not be the best for other pet owners. Every pet owner should consider their own preferences, risk tolerance, and lifestyle. If you are willing to actively manage your finances, you could benefit from a pet savings account.

Pet insurance requires less personal management, making it far more convenient. You can obtain the benefits and coverage of pet insurance so long as you meet the conditions and premium of the policy.

Making the Decision: Which Option Is Right for You?

It can be difficult to choose between pet insurance and a pet savings account. Here are some guidelines to keep in mind when making the decision.

Assess your pet's needs and your financial situation

Does your pet need frequent veterinary attention? If so, a pet insurance policy may offer more value, since you won’t be able to grow interest if your pet savings account is constantly depleted.

If you don’t have significant savings and are unable to afford a high emergency vet bill, it is also typically better to have pet insurance. Pet insurance can help you pay for urgent bills that you couldn’t otherwise afford.

On the other hand, if you have plenty of savings and want to grow a pet savings account over the years, a pet savings account may be preferable. The interest accrued can help you pay for pet care expenses.

It is important to assess the pros and cons of each option based on your specific circumstances.

Seeking advice

Veterinarians and financial advisors can provide you with valuable, expert advice. A vet can help you assess your pet’s risk factors and needs, whereas a financial advisor can help you devise an individualized strategy for handling pet care expenses.

Another great idea is to see what other pet owners have chosen. Look online or ask in communities to see what owners of your pet breed have done. Reading anecdotes can facilitate the decision, making pet savings accounts and pet insurance policies seem more solid and useful.


Resources and Further Reading

Here are the features of some top pet insurance providers to get you started.

If you are considering a pet savings account, ask your vet clinic to see whether they offer any pet savings accounts.


Pet owners should weigh the pros and cons of each option carefully. Choose the option that aligns best with your pet's healthcare needs and your financial goals.

It is generally a good idea for pet owners to secure pet insurance for better financial protection in case of a serious pet incident. If suitable, an additional pet savings account could help you accumulate value in the long run.

Regardless of which choice you make, it is always good to proactively plan for your pet’s healthcare needs. If you’re looking for more pet insurance tips, check out our pet insurance reviews and blog.

About The Author

Ru Chen

Ru Chen

Content Writer

Ru Chen is a content writer with several years of experience in creating engaging and well-researched articles. She mostly writes about insurance, business, digital marketing, and law. In her free time, she can be found watching horror movies and playing board games with her partner in Brooklyn.

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