Substitute Insurance

If perception is reality then doesn’t logic dictate that the difference between a bad decision and a good one isn’t the choice that’s made but the results of that choice? If you leap out of the way of an oncoming car, you’ve made a smart choice. But if you land in front of another car speeding in the opposite direction, suddenly your decision to jump doesn’t seem as smart.

Both outcomes resulted from the exact same choice; to dive out of the way of certain death. But in evaluating the results, the first scenario seems to be the product of a smart decision while the second outcome resulted from what seems to be a decidedly bad choice. But does that mean that random fate determines the merits of our decisions in life? Couldn’t one say the decision was smart regardless and the outcome simply unfortunate in the latter case?

A conversation with my father helped shed some light on the matter for me. He suggested that the merits of a decision are set at inception regardless the outcome and that fate was simply a random variable. Seeing I didn’t fully understand his point, he explained further.

He asked if I would be enticed by an offer that could earn me $50,000.00 in ten years for a meager upfront investment of only $5,000.00. The odds, he explained were only about 50% that I would hit that target and improved if I would be willing to accept a lesser return. I’d have much better odds of realizing $40K, for example. But regardless, the odds of my losing my initial investment were very small. Though I’d have to wait 10 years, I’d be virtually assured of getting at least my initial investment back. Was I interested? I was, but only if I had no other interests in mind for that $5K. My response wasn’t enthusiastic.

He then asked what I would do if he offered me obscenely slim odds to make $5 million dollars and all I’d have to invest is $5 for the purchase of a lottery ticket. I answered without hesitation that I’d hand over the $5 with hardly a thought.

He then deflated my confidence a bit by explaining I’d just made the same bad decision thousands of lottery ticket purchasers make every day. The mistake I was making being the failure to consider the odds in assessing the value of the investment simply because I was so impressed by the potential return relative to the amount I’d have to pay to get in on the deal.

But this isn’t about investing or lottery or even dodging traffic. The objective here is weigh the value of purchasing health insurance for your pet. If you’ve been considering it, you don’t need me to tell you that the decision can often be a difficult one.

Much as with the investing example, many of us struggle with the choice of insuring our pets because we tackle this dilemma with the same irrational approach we might apply to purchasing a lottery ticket. What if our pet never requires an expensive procedure? Will we be able to stomach having thrown away all that money over the years for nothing?

Or we struggle with our emotions and wonder what failing to purchase pet health insurance says about us. Does not doing so mean we don’t love our pet enough? Are we so miserly we can’t even risk some money for the animal we claim to love?

In both cases these are the wrong approaches and will not lead to a smart decision. Basing the choice on what-ifs is wholly unproductive. No matter how healthy your particular breed may be in general, you can’t predict accidents such as poisons or car accidents.

In relying on emotion in the decision making process, the second approach is no better. A financial decision should never be grounded purely in emotion. Your financial circumstances might simply dictate that you can’t afford the monthly fee for health insurance. That doesn’t mean you love your pet any less, it’s just a fact of economics.

In deciding whether or not veterinary insurance is the smart choice for your pet, take a rational approach. Look at the facts. Should an expensive procedure be unexpectedly required, could you cover the cost out of your savings? Remember it could cost you thousands of dollars. Obviously, if you make a lot of money and are good at maintaining savings for emergencies then there’s probably no point in getting insurance.

Is your pet very young and healthy? If so, and particularly if you’re relatively comfortable financially, then perhaps the choice to purchase pet insurance can be postponed until later in your pet’s life.

Does it make more financial sense to you to pay a monthly fee just in case? For many, the monthly expense of insuring a pet is preferable to the possibility of an unexpected hit to their savings. Job stability, the balance of your savings account and your own tolerance for risk should be the factors that influence your decision.

After reviewing all the facts absent attempts at prognostication and absent pointlessly kicking yourself emotionally, you’ll be able to make a smart decision. That means the right choice at the time regardless the unanticipated outcome down the road. A rationally grounded decision will leave you content with the knowledge that you did what was right at the time. Save the random, emotionally-based attempts at predicting the future for your trip to Vegas.