Hi LadyMustache,
I have mostly just paid out of pocket, but I don't know if that's what I would do in your case. You said you would do basically anything to prolong her life (and to forestall any who might criticize you for causing your dog pain and suffering by keeping her going for your own sake, let's just stipulate now that you would do basically anything to prolong her life if you felt that she would continue to have good quality of life once treated.)
Given that you have the insurance in place, she's now starting to get to the age where you may actually need to call on it. Many health issues, such as kidney or liver problems, cancer, heart disease, etc, will begin to cause problems gradually, before significantly impacting quality of life. For example, you may be able to remove a cancerous mass, and return her to perfect health, though the cancer might come back again at a later date. Even testing can be quite expensive, say for example, to have an EKG done. If those are the types of thing you would want to go ahead with, to track down the source of an ailment, or to treat one, then I would think you'd appreciate having insurance in place. Even the testing for one of those significant illnesses could eat up the equivalent of the $1,200 in annual premiums pretty quickly.
Like I said, I don't have insurance - I've always had multiple pets, and simply wouldn't have been able to afford to insure them all when younger. But, I have looked into it once or twice, and one of the things you should take into account before deciding whether to keep it, is what the coverage looks like, not just the deductible. Is the coverage per illness? If so, is there a per illness lifetime cap, or an annual one? What is that cap? Talking to your vet about some of the likely illnesses, do they think that cap would adequately cover most of the costs associated? Other coverage might not be per illness, but will likely still have some limit of coverage - is that annual? Or lifetime? Again, what's the cap? If your dog gets cancer and hip dysplasia, will you have enough coverage for both? (That also requires running the odds of your dog getting both cancer and hip dysplasia, which may be influenced by her breed and anything you know about her genetic history.)
Bottom line, insurance is always basically gambling. There are 4 possible outcomes. Some people will pour years of payments into the premiums, and have a pet be perfectly healthy until they quietly pass away in their sleep one day. Others will pay their premiums faithfully and be glad they did so, when their pet's expensive treatment is totally covered. Some people will count on nothing going wrong, and pay through the nose when all kinds of rare conditions strike pet after pet. (That's me, by the way!) Others (my sister) would never even dream of insurance, feed their pet the crappiest grocery store diet, and have their pet live a long and healthy life, never visiting the vet.