Pet insurance is meant to protect owners from paying exorbitant medical bills when their pet gets injured or falls ill. While convenient for your peace of mind, pet-care policies can also cost hundreds or even thousands of dollars a year. If you're financially secure enough to pay a large sum out of pocket for emergency pet care, you can probably do without insurance. But if you wouldn't be able to pay thousands for an unexpected treatment, you should consider taking out an insurance policy.

Should you get pet insurance?

When deciding whether to get pet insurance, there are two main factors to consider: how much you can pay if your pet has a serious emergency and how much tolerance you have for risk. While the cost to treat ear infections or an upset stomach likely won't break the bank, serious health problems can cost several thousand dollars. You could be faced with a hard decision if you don't have insurance and can't afford emergency costs.

In the table below, we show more examples of the costs versus the benefits of pet insurance.

Some pet owners end up paying an insurance premium for years and never receive the benefit, but it's better to think of insurance as an annual cost. If nothing happens to your pet during one policy year, then you've protected your pet and your wallet for the next year.

But keep in mind, insurance is only worthwhile for large, unexpected expenses. Most insurers do not cover preexisting conditions or routine check ups. For inexpensive treatments and annual wellness exams, you'll pay out of pocket with or without insurance.

What are the costs of pet insurance?

The cost of pet insurance varies depending on where you live, your pet's age and breed, and the level of coverage you want. In most cases, you'll end up paying between $25 and $70 a month to insure your dog and between $10 and $40 a month to insure your cat.

These costs can be lower or higher depending on how much coverage you want. For example, you can increase your premium in exchange for a larger payout when your dog or cat gets an eligible treatment.

If you're looking to purchase a policy, get a quote from an insurer's website. You can also compare pet insurance plans to find the policy that best matches your budget and desired level of coverage. The table below shows quotes for two sample pet profiles: a 4-year-old male Labrador and a 4-year-old female Bengal cat. For older pets, the costs of pet insurance will likely be much higher and may not be worth the expense.

Pet insurance plans

Because pet health insurance doesn't cover preventive care, the only real benefit of buying coverage is for accident and illness protection — so make sure your policy covers both. Most policies are customizable and allow policyholders to choose their deductible, reimbursement level, and annual or incident maximum.

Your deductible — ranging from $0 to $1,000 for most plans — is what you must pay for treatment before insurance kicks in. Reimbursement options are usually available from 50% to 100%, meaning you can choose to be partially or fully reimbursed. The range for annual and incident maximums varies from as low as $1,000 to higher than $15,000, though you'll pay substantially more for a higher max.

Finally, it's important to note that pet insurance is different from human health insurance. Whereas companies that cover humans pay for medical fees upfront, pet insurance companies require owners to pay for medical bills and then apply for reimbursement. Some owners express frustration at the reimbursement process and are surprised to learn that certain conditions aren't covered. If you're unsure about what's covered, read your contract and ask the company questions about your plan.