Insuring our four-legged family members.
by Grace S. Yung, CFP
For anyone who has ever loved a pet—regardless of whether he or she walked, crawled, flew, or swam—it goes without saying that in most cases, your furry, feathered, or finned companion was without a doubt part of the family.
In the LGBT community, pets take on an especially important meaning, as in many instances, individuals and couples do not have children. So, additional love and affection is placed on our beloved pets—and for that reason, we want to ensure that our pets are well taken care of should they require a trip to the vet, as well as when or if we are no longer there to care for them.
Adding Up the Tab of Being a Pet Parent
Depending on the type of pet (or pets) you have, the cost of having them can certainly add up. Just like having children, the cost of feeding and keeping a roof over their heads can be expensive—starting with the initial price of adoption.
Over time, the cost of food, spaying/neutering, health care, and boarding can certainly add an extra category to your household budget. Yet, for most in the LGBT community, it is a cost that is more than worthwhile—and, the good news is that some of the higher costs like health care are now being eased through options such as pet insurance policies.
What Is Pet Insurance?
There are several different types of pet insurance policies on the market today. The most basic policies will pay for some or all of the veterinary costs that are related to illnesses and accidents incurred by a covered pet. Other pet insurance policies will even pay out a benefit if your pet dies, is lost, or is stolen.
How Pet Insurance Works
Similar to with health insurance for humans, most pet medical insurance policies will pay benefits that are a percentage of the veterinary expenses incurred, once a stated deductible has been met.
In the past, most pet insurance policies did not offer benefits for preventive care such as vaccinations or elective procedures such as neutering. Today, however, as these types of policies have become more mainstream, more comprehensive benefit options are being offered. Some policies will even provide benefits for prescription drugs, dental care, and alternative treatment such as acupuncture.
Choosing the Right Pet Insurance Policy
When deciding on the type of pet insurance to purchase, it is important to consider that there are two primary types of policies that are available on the market today. These are lifetime and non-lifetime.
The non-lifetime type of policy will cover most of the health conditions that are suffered by a pet during the course of a given year. However, upon policy renewal, if a particular condition has had a claim filed, it may be excluded from coverage going forward. Therefore, should that condition need further expense, it is likely that the pet owner will be required to pay for the treatment out-of-pocket.
A lifetime policy, on the other hand, will not exclude coverage for conditions—even if claims have been filed. These policies, however, could have other types of limits. For example, they may exclude coverage for pre-existing conditions. Therefore, it is important to read any policy carefully before committing to a plan.
Ensuring That Your Pet Is Okay, Even If You Aren’t Here
Those in the LGBT community who truly love their pets have also been more apt to set up pet trusts in order to ensure that their pets are taken care of should they become incapable of doing so in the future.
Pet trusts are legally sanctioned arrangements that will provide for both the care and the maintenance of your pet or pets in the event of your disability or death. Through a pet trust, you can entrust an individual who is known as a trustee to utilize the funds in the trust for the care of your pet(s). If or when the time comes for the trust to take effect, the trustee will make payments to a named caregiver.
In setting up a pet trust, the name and address of the following participants will be required: trustee, successor trustee, caregiver, and successor caregiver.
In addition, in order to ensure the best possible care, you should identify your pet in detail, as well as describe his or her care and standard of living in detail. This information should include nutritional needs—including any special diet that they may require—as well as any regular exercise they are accustomed to, and other specific details regarding their habits and needs.
You should also include specific direction regarding your pet’s burial or cremation for when that time comes, as well as a named beneficiary who will receive any remaining trust funds that were not used by the pet trust should there be any money left over.
Taking the Next Step
Pet trusts can offer peace of mind to pet owners in that their beloved pets will be taken care of for the long term. Likewise, today’s pet insurance policies are now offering many customizable options in terms of coverage levels and deductibles—so it is easier to fit these plans into most pet owners’ budgets.
It is important to note that the enforcement of pet trusts can differ from state to state, so it is best to set up these vehicles—as well as any other type of pet insurance and related entity—through a professional who is well versed in these matters.
Personal finance-related questions may be e-mailed to [email protected].
Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston.
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