I'm a financial planner — when my client asked if they should drop their pet insurance, I had 3 options

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• My client's pet insurance rose from $25 a month to $125 over a decade.
• I asked them whether self-insuring was on the table, and I told them to look at other quotes.
• Pet insurance comes with lots of options depending on your needs and comfort level.

Recently, one of our wealth management clients reached out to ask what they should do about their pet insurance policy. "My pet insurance premiums recently jumped through the roof," they said. They wondered if they should change providers or drop their coverage altogether.

Reviewing and analyzing all kinds of insurance policies is part of the protection planning we do for clients. We look at their overall financial picture, identify areas with gaps in coverage, and provide recommendations on how much insurance they need.

Just as importantly, we consider what they don't need. That's usually the category where pet insurance falls.

Our typical recommendation for pet insurance

We don't often recommend pet insurance. The reason is the same as why we don't often suggest short-term disability insurance: It may be more cost-effective to "self-insure."

In practice, this means keeping a fully-funded emergency reserve to cover costs should something unexpected happen, including surprise vet bills or medical care for pets. Yes, you need to pay out of pocket for those costs, but the idea is that, in the long run, you save money by not paying insurance premiums.

However, self-insuring is not an option for everyone. If you can't manage unpredictable expenses in your budget, pet insurance may be worth it to help minimize those big out-of-pocket hits.

Even if you do have the cash flow and savings power to put away large sums of cash earmarked for emergencies, there are cases where getting (or keeping) pet insurance can benefit you.

That was the case for this client who asked us if they should keep their pet insurance policy.

Keeping coverage could provide peace of mind

The case that I outlined for keeping the pet insurance was two-fold:

1. Knowing the coverage is there if needed can provide peace of mind.
2. The dog would likely require more frequent and more varied medical care with age.

Dogs have all kinds of "-ologists" now, in addition to regular veterinarians. There are many more treatment options for various ailments that we didn't even have access to on behalf of our pets 10 or 15 years ago.

If the family felt they would want to take their dog to any available specialist needed, pet insurance would be a good thing to keep since they were more likely to use it.

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When it makes sense to drop pet insurance

Our client first got pet insurance coverage for their new puppy. At the time, the insurance cost was fairly cheap at $25 a month.

But that was a decade ago. Now, they had a 10-year-old dog and an insurance policy that cost $125 a month.

I advised them that this could be a "six one way, half-dozen the other" situation.

Given that the dog was older, it was reasonable to assume more veterinary care was necessary. That's likely why their pet insurance premiums went up; a 10-year-old dog is likely classified as a "senior" and, therefore, more expensive to insure regardless of carrier.

Being able to self-insure was one argument for dropping the coverage. Our client could cancel the contract and direct their $125 in premiums into a high-yield savings account earmarked for vet bills.

They also had sufficient liquid assets, cash reserves, and strong income to handle a large medical cost should it occur, even without redirecting the old premium cost into their savings.

How to reduce premiums on pet insurance

My client's question was not just whether they should keep insurance or not. They also wanted to know what to do about the rising cost of pet insurance premiums .

I advised them that if they wanted to keep the insurance, the next step would be to get quotes from other carriers to compare the current policy to a new option from a different company.

With any kind of insurance policy, pet or otherwise, I strongly recommend shopping around and getting at least three different quotes so you can compare coverages and rates. You can save a lot of money simply by looking at what's available on the marketplace.

Another way to save on premiums is to consider the policy itself. Some provide more coverage than others; you may or may not need those extras.

Sticking with a simpler policy may mean getting less covered, but that also tends to offer a lower premium. At the end of the day, your needs and preferences will point you in the right decision.

For our client, they ultimately decided to keep their pet insurance coverage. They anticipated using the benefits more often as their dog got older. However, they also shopped around and switched insurance carriers. Their new premium is $50 a month, which saves them $900 a year.