Like most horse owners, colic surgery is one of my biggest fears. An incredibly expensive surgery without particularly good survival rate? It's enough to make anyone shudder. So far I've been lucky; Heyleigh rarely needs anything beyond routine medical care, but I always worry that someday she'll colic to the point of needing surgery, or have some other medical expense come up that I can't reasonably deal with. A couple of years ago, that drove me to look into ways that I could pay for an equine medical emergency if it ever came up.
Of course, the first thing I looked at was medical insurance. The biggest issue for me was that before equine insurance companies will allow you to get medical insurance, you have to get mortality insurance too. There's nothing wrong with mortality insurance, but what I really wanted was the ability to pay for medical treatment to save my horse's life, not a check in the mail if she died. The other issue was that it's expensive. Most companies at the time were quoting Heyleigh at around $200-$300 per year for mortality insurance plus a few thousand dollars in medical coverage. As with all insurance, that money would go down the drain if there wasn't an unforeseen catastrophe.
I thought long and hard about it, but I eventually decided that with college fast approaching, I couldn't commit to spending that much every year on something that, if Heyleigh stayed healthy, would be a complete waste of money.
For a while, I considered putting Heyleigh on ColiCare eligible supplements from Smartpak. It was little bit more expensive than medical insurance, but Heyleigh would get a supplement every day that would hopefully reduce her risk of colic to begin with, and there would be up to $7500 in colic surgery reimbursement if Heyleigh ever needed it. I quickly realized it wasn't a good choice for Heyleigh though; the cost, coupled with the fact that it's not true insurance and doesn't cover anything besides colic made it unreasonable given my financial situation.
What I finally settled on was something rather unconventional, a Roth IRA. Roth IRAs are retirement savings accounts where your money is taxed before being deposited so that all money can be withdrawn after retirement age tax free. They typically have very high return rates, and any money that you deposit can be withdrawn at any time without penalty (the earnings the money you deposit does have a high penalty for early withdrawal) If started early enough, these kinds of accounts can turn a couple thousand dollars into over a hundred thousand by the time retirement rolls around. It was something I had been considering for a while, but when I realized I could use it as an emergency fund, I finally made the leap and started one.
As of now, my Roth IRA functions as it was intended to. I put money into it whenever I have the chance, and I don't use it for normal expenses once it's in the account. If all goes as planned, it won't get touched until I retire. If all doesn't go as planned, whether that's Heyleigh getting sick, my car getting totaled, or any other disaster, I should have enough money stashed away to take the edge off the bill. The best part is that unlike insurance, I get rewarded for not needing it. Every year that my Roth is untouched, I see returns come in. My initial contribution has seen about a 25% return over the course of two years.
Roth IRAs aren't for everyone. While I'm hardly a financial adviser, I think it's a pretty safe bet that paying off high interest debt and living expenses should come before tucking money into a Roth. But for people who are trying to decide between an equine (or general) emergency fund and saving for retirement, I highly recommend looking into a Roth IRA.