Insurers define health insurance for cats, dogs and other non-human animals as a form of property and casualty insurance.
Life insurers do not pay death benefits directly to non-human animals.
Many consumers, on the other hand, are eager to insure their love for their furry (and scaled, and feathered) companions.
Erie Insurance has a bit of data on the size of the market for death benefits for pets in a summary of results from an online survey. The Erie, Pennsylvania-based insurer sponsored the survey to support this month’s Life Insurance Awareness Month outreach campaign.
The sample included 650 U.S. residents ages 65 and older. The survey team asked the participants who had life insurance why they have life insurance.
One of the five most popular reasons had to do with self care: 37% of the participants with life insurance said they got covered so loved ones would have money to pay for the participant’s funeral experiences.
The four other top reasons had to do with helping loved ones. Here’s the percentage of life insurance insureds who named those reasons as important motivations for getting covered:
- To have money to leave as an inheritance for loved ones: 37%
- To help a spouse, children, or both the spouse and children maintain their standard of living: 32%
- To help loved ones pay the participant’s debts: 17%
- To help the spouse, children, or both the spouse and the children stay in the current home: 10%
A life insurance policyholder who wants to “leave the live insurance to the pet” must create a pet care trust, then name the trust to serve as a life insurance policy beneficiary. Once the trust gets the policy death benefits, the trustees are supposed to use the cash to help pay for the care of the pet.
But 10% of the survey participants told Erie they had named a dog as a beneficiary, and 4% said they had named a cat as a beneficiary.
About 59% of the participants said a spouse was a life insurance policy beneficiary, and 38% said they had named one or more children as beneficiaries.
In other words: The idea of naming a pet, or a pet care trust, as a beneficiary was about 24% as popular as naming a spouse as a beneficiary, and 37% as popular as leaving life insurance benefits to one or more children.
— Read 5 Legacy Planning Basics for New Parents, on ThinkAdvisor.