How to use the pet insurance break-even calculator
- Enter the premium and whether it is per month or per year.
- Enter the annual deductible, the reimbursement rate and an annual coverage limit if the plan has one.
- Enter the covered vet bills you expect in a year, or what you had last year.
- Read what the insurer would pay, what you would pay with and without the plan, and the bill size at which the plan breaks even. The table tests other bill sizes.
Formula
Insurer pays = (covered bills - deductible) x reimbursement rate, never below 0 and never above the limit
Plan result = insurer pays - yearly premium
You pay with insurance = premium + bills - insurer pays
Break even bills = deductible + premium / reimbursement rate
The break even formula applies when the annual limit is not reached. If the maximum payout is below the premium, the plan can never pay for itself.
Worked example
A plan costs $55 a month ($660 a year) with a $250 deductible, 80% reimbursement and a $10,000 limit. In a year with $1,800 of covered bills, the insurer pays (1,800 - 250) x 0.80 = $1,240. The plan comes out $580 ahead.
The break even bill is 250 + 660 / 0.80 = $1,075. In a quiet year with only $200 of bills, the plan pays nothing and costs $660. With $20,000 of bills the payout is capped at $10,000.
How to think about pet insurance
Insurance is not an investment. Most years it will pay out less than the premium, and in a year with a big illness or accident it can pay far more. The value is in avoiding a bill you could not afford. Whether that matters depends on your savings. Some owners set aside the premium in a savings account instead, which is another way to compare.
What plans usually leave out
Plans often exclude pre-existing conditions, have waiting periods, cap payments per condition or per year and may not cover routine care or certain treatments. Premiums also tend to rise as a pet ages. Read the policy terms and enter only bills the plan would cover. This tool uses one year and one set of terms, so test a few scenarios.
Planning the cost of a pet
To think about age and life stages see the pet age calculator, and to plan growth use the puppy weight calculator. Yearly costs belong in your budget planner.
Assumptions and limits
- The reimbursement rate, deductible and limit are values you enter, and the defaults are examples.
- One policy year is modeled, with a single annual deductible and no per-condition limits.
- Waiting periods, exclusions, co-pays, premium increases and claim delays are not modeled.
- Only enter bills that your plan would cover.
Frequently asked questions
Is pet insurance worth it?
It depends on your finances and your pet. It is most useful as protection from a large unexpected bill, even though in a year without large bills it can pay less than it costs.
How do I find the break even vet bill?
Add the deductible to the yearly premium divided by the reimbursement rate. Above that bill size, the plan pays more than you spent on premiums.
Does the deductible apply every year?
Many plans have an annual deductible that resets each policy year, though some use a per-condition deductible. Check your policy.
What bills should I enter?
Only covered bills. Routine visits, pre-existing conditions and other exclusions often are not reimbursed.