Is insurance worth it? A cost benefit analysis

I've seen several posts where people are asking if insurance is worth it, and in every case the answer is (somewhat unhelpfully): it depends. In this post I lay out a few different cases using real world numbers and explore the value, assuming the cost is paid off over a year. My last two emergency vet bills have been about $1000 and $3000 so I'll be using those numbers for comparison.

TL;DR: Credit cards are always the most expensive option unless you're able to use a 0%APR intro offer, about 3-6x the cost of paying upfront or using insurance. Personal loans can be cheaper than insurance for moderate($1000) bills, but is still significantly more for higher($3000) bills. Paying out of pocket is much cheaper for moderate($1000) bills, but insurance ends up being the best for high($3000) annual bills.

Insurance companies are buisnesses and they're only providing insurace because on average, they get more money from you than they give back when you need it. That being said, sometimes insurance is the best or only way you can afford treatment for your furbaby. I've gotten and seen a few different quotes with premiums ranging from $45 to $89, deductables from $250 to $1000, and reimbursement rates from 50% to 80%. Pricing and value will vary state to state and person to person, so get your own quote for a good comparison of numbers. For the moderate($1000) bill, the annual cost of premiums and deductable could range from $942 to $1818, making only the best plan worth it. For the high($3000) bill, the annual cost ranges from $1342 to $2818, making all insurance plans worth it. Generally, you will end up paying the full amount upfront and then be reimbursed for a portion of it depending on the plan.

My vet offers financing, so assuming you get a 7% rate and pay it off over a year, the moderate bill would cost you $1510, cheaper than all but the best insurance. Financing the high bill would cost $4532, about double the worst insurance.

Carrying a credit card balance is one of the worst financial decisions you can make. Paying off the charge over 12 moths would cost $2907 for the moderate bill, and $8722 for the high bill, costing 3-6x the best insurance option. The only situation where you can reasonably carry the balance would be a 0% APR intro offer, which may or may not be possible depending on your credit and other factors and probably shouldn't be anyones plan A.

In the end, exotic vets are expensive and it's impossible to know how much you're going to need care. For a wealthy experienced bun owner who is able to identify and deal with some common issues without a vet, insurance provides less value. A first time bun owner who relies on the vet more often who cant afford to throw money around will get the best value for insurance.

copy this sheet and play around with numbers based on your situation and quote(please point out any oopsies!): https://docs.google.com/spreadsheets/d/1CPA-irEFq-akpiiJ7594UwtDWt1atjN0HWsuCU06QB0/edit?gid=0#gid=0