Family Law

Divorce Insurance?

By J. Benjamin Stevens

Is there such a thing as divorce insurance?  Unbelieveably, the answer is "yes".  A company called Safeguard Guaranty Corporation has begun selling such policies.  Of course, there are many strings attached, such as who can purchase the policies and a forty-eight month waiting period before you can file any claims.  

The basic way this insurance works is that you buy a certain amount of units at a fixed cost per month per unit.  If you end up divorcing, you receive a payout.  For example, If you had a ten unit policy, your monthly premium would be $159.90, and if your marriage ends after five years, you would receive $15,000.

I can't help but wonder if this type of insurance makes sense.  I understand the need to be cautious and to consider the "what if's" in life, but if you are concerned enough about the success of your marriage to buy insurance and pay a premium each and every month that you're together perhaps you shouldn't marry in the first place.

In my opinion, when looking at this insurance from a cost/benefit analysis, it seems like it's far from a good investment.  For instance, to receive the $15,000 payout referenced above, you would have paid $9,594 in premiums over those sixty months.  If you had invested those same premium payments and earned a mere 8% return, after five years you would have had $11,748.95 – and your marriage!

Source:  "Insuring Against Divorce" published at the Total Divorce Blog.

Full post as published by SC Family Law Blog on September 14, 2010 (boomark / email).