Dad On Divorce Insurance

by Arin Greenwood on August 25, 2010

Divorce insurance is a new insurance product that lets a person pay a small monthly fee – $15.99 per month per unit of insurance – and, once the policy has matured, get a lump sum in case of divorce. (The lump sum is to cover divorce-related expenses.)

Fraud and moral hazard both seem like big glaring issues with regard to divorce insurance – but, more emotionally, divorce insurance also seems like the kind of thing where if your spouse-to-be says he or she wants divorce insurance, that might make you not want to marry them in the first place.

But people sign prenups all the time – another quite unromantic instrument that allows a person to plan for marital failure. Does the signing of a prenup also make a person question their intended? I called a family lawyer – let’s call him “Dad” – to see what he thinks.

Dad said that he’s done about ten prenups, and that every time he’s done a prenup, it’s been when there were unequal assets and kids from previous relationships involved. No matter how optimistically a person might view their impending nuptials, he said, people know their kids have to be protected.

Dad also said that for the most part, people signing prenups have acted remarkably normal toward each other – acting like they act when they’re not in his office signing a prenup – even when they’re contemplating the division of assets should the marriage fail.

“No one has ever said to me, ‘I really hate doing this,’” he told me. “They act much differently than I think I would act.”

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  • John Logan


    Thanks for the link to our website but I’ll make a wild guess that you’ve never been divorced. If you had, your idea of that kitchen table discussion about prenups or divorce insurance would take on a whole different tone. However, since these are individual policies that discussion with your soon-to-be or current spouse doesn’t have to occur in the first place.

    Ask “Dad” how many POST-nuptial agreements he’s done and the answer will probably be zero. People don’t go into marriage expecting to divorce down the road, but the reality is that a few years in there may be some serious cracks in the marital foundation that give good cause to purchase a policy as a preventive measure. Some people make it through rough spots in their marriage, others inevitably do not. While WedLock is not for people who are already in the process of divorce, most people see that storm coming on the horizon years before it actually arrives.

    Some facts about divorce that you may not know:

    • Divorce reduces the average person’s wealth by 77% – Jay Zagorsky, National Longitudinal Survey of Youth study findings, Journal of Sociology, Ohio State ‘s Center for Human Resource Research

    • Forty-four percent of women experience poverty following divorce. – Julia A. Heath and B. F. Kiker, “Determinants of Spells of Poverty Following Divorce” Review of Social Economy, 50

    • Absent remarriage, the typical divorced woman can expect a standard of living near the poverty level, and this drop cannot be explained by selection effects (causes) into divorce. – Pamela J. Smock, Wendy D. Manning, and Sanjiv Gupta, “The Effect of Marriage and Divorce on Women’s Economic Well-Being” American Sociological Review, 64

    • About one-fifth of women who apply for welfare benefits for the first time do so because of divorce or separation; about one in four mothers who were first propelled onto welfare by divorce are still welfare-dependent five years later. – Johanne Boisjoly, Kathleen Mullan Harris, and Greg J. Duncan, “Trends, Events, and Duration of Initial Welfare Spells” Social Service Review

    • The long-term effects of divorce on welfare expenditures are even higher, as daughters of divorce are three times more likely to become unwed teen mothers, and are also more likely later to be divorced. – Andrew J. Cherlin, et. al., “Parental Divorce in Childhood and Demographic Outcomes in Young Adulthood” Demography and Paul R. Amato and Alan Booth, A Generation At Risk: Growing Up in an Age of Family Upheaval (Cambridge, MA: Harvard University Press)

    These are just samples of the numerous studies done on how divorce negatively impacts the traditional family’s financial well-being. And today, you and I as taxpayers foot an annual bill of over $112 BILLION dollars in Federal, State and Local taxes to support fragmented families that can’t support themselves according to a study entitled The Taxpayer Cost of Divorce, done by the Institute for American Values.

    You’re right that it’s not romantic, but people need to realize that marriage is a legal, binding contract that immediately impacts their financial situation both now and in the future. And the risk of divorce is real and tangible – higher than the risk of auto accidents (1 in 3 for 1st marriages and much higher for 2nd and 3rd marriages) and we think nothing of paying for many forms of insurance on risks that are far less likely and have far less financial impact. The truth is that WedLock Divorce Insurance will be a great way for some people who don’t have or need a prenup to prevent going into poverty after divorce.

    With regard to fraud and moral hazard, I suggest you visit our website at to better understand how we (as a company) protect against adverse selection and why fraud it unprobable. The idea of moral hazard is unrealistic as well. Do people drive more recklessly simply because they have car insurance? Or take up extreme sports because they’ve just invested in good life or health insurance? I’m sure you’ll agree the answer is no. Divorce is a painful and expensive experience for anyone so the idea that a significant number of people would be more inclined to get divorced ONLY on the basis that they have a WedLock Divorce Insurance policy is ludicrous.

    I’ll be happy to discuss any of the above on your Podcast.

    John Logan
    CEO SafeGuard Guaranty Corporation

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