Personally I believe in pet insurance. I think it's a great idea and I know with an extremely large bill it will be the difference between my dogs living and them having to be put down. With that said, I'd cancel VPI's policy. I use to work for them in Brea, CA and they avoid paying claims that they should pay. But keep in mind I last worked for them around 04' or 05' so maybe they've changed. Find out why they haven't paid, look at your declaration page and compare the info. I personally have Embrace pet insurance and have been paid twice for the two claims I submitted. I know a friend who has banfield's and is very pleased with them. I think there's trucompanion or something like that. I heard good reviews about them from clients at my vets office. Just shop around if that's the route you'd like to go.
Upon your death your dog will mourn you until the day he dies; your cat will play with your toe tag as they wheel you out ;)
For me, I prefer to have a savings for my dog, as I see pet insurance is not supported by the government as of yet, and the fact that so many things can go wrong and to trust a company that may or may not be truthful is a risk, since I trust myself, I made my own pet insurance which is my doggy savings account Bank insured, JMO