Wouldn't that be the truth for medical insurance too? Insurance companies can't give rates that they foresee doing poorly and expect to remain a business. Insurance companies make a ton of money. Wouldn't people be able to put that monthly payment into health savings accounts to do the same thing? Its much easier for people to give up a little money, even for financial loss in the long run than to give a huge lump sum, especially if something else is going wrong also.
Didn't know this was going to turn into an insurance thread. And to think I contributed to it!
Actually, no. First, you have to distinguish between managed care (HMO/PPO) and insurance (which may be a part of HMO/PPO, but may not as many people discover when something goes really wrong.) This is somewhat true for basic HMO care (if you set aside the money you, and probably your employer, are paying, you could probably cover basic medical care, especially preventive care.) However, the reason human medical insurance kind of works, and the reason most plans are still through employers, is because of the averages. If you put 99 healthy people on a plan and 1 person who has a catastrophic medical event in the same group, the pay in of the 99 healthy cover the cost of the 1 catastrophic event...up to a given point (often termed the limitation of coverage.) That is why some health plans/insurance require pre-enrollment physicals, and some charge you more (sometimes a LOT more) if you have a pre-existing condition, have a certain medical background, have certain behaviors (smoking, motorcycle riding, history of injuries), or are of the certain genetic descent.
Theoretically, this is what is happening with pet insurance....those whose animals remain healthy and are then struck dead by HBC or disappear or get an illness not covered due to genetic predisposition, etc.... are the ones who cover costs for the animals that have multiple catastrophic issues. It IS possible to be kicked out of a pet insurance plan for too many claims (which your homeowners and auto insurance can do as well.) We actually had a client who was kicked out for too many claims across her household of pugs. If I remember correctly, like health insurance, most pet insurances do have limitations and caps as well.
I have had the very bad experience of what happens in life when you hit limitations of coverage and cost caps with human insurance.
I am not suggesting pet insurance isn't a good tool for people who don't have the discipline to set the money aside and limit access to it for thier pet's sake only, just that it isn't necessarily the best move fiscally. Our side account is actually in a different state at a credit union that I don't have regular access to. I have to call to release the money. For us, that means we would either pay out of our primary bank or credit cards, and should be able to transer money within 48 hours (if it was a weekend/holiday emegency.)
I just realized that I know way too much about insurance. My late husband really wanted to find a way to set up a truely non-profit self-enrolling insurance...but the issues he ran into were the people who need it are the ones with pre-existing expensive conditions...the ones who didn't think they needed it were generally young, healthy, and had a mentality of invincability.
