Insuring Against Divorce. A Whopper of an Idea!
by Efin Advisor | January 8, 2010
A bride and groom can safeguard their wedding day with insurance for the reception, the caterer, the flowers, the limousine and the honeymoon. Now, a University of Illinois professor is suggesting that the same couple insure their marriage against breaking up. The innovative new idea? Divorce insurance!
To create such an insurance product, underwriters think like statisticians identifying several “risk factors” associated with divorce that could figure out who would qualify and how much the insurance would cost. These include age, work location and education level, among other factors.
Critics say the idea may never make it to the altar since divorce is not a “fortuitous event” like an earthquake or hurricane. It’s a matter of choice, which presents a “moral hazard.” Couples choose whether to get divorced, or whether to do the things that get them divorced. One soluton to the dilemma may be to have a “blackout period,” such as two or more years after you get married and buy the insurance before untying the knot.
Buying divorce insurance when you get married sounds a little like a pre-nuptial agreement. You’re hedging your bet in case till death do us part comes apart. If you’ve planing a wedding, you may want to consider life insurance fore newlyweds before divorce insurance.
Great idea for a post. Another factor for underwritters to consider is 50% off the top will be collecting on the policy.
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As controversial as it may sound, the idea of insuring against divorce might also want to include an incentive for couples who stay together. Like a whole life policy for marrieds that accumulates cash value!
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SGCCEO Reply:
January 12th, 2010 at 3:24 pm
Tyler – You hit the nail on the head. It’s coming to the general public very soon and people with successful marriages will benefit far more than people who divorce. For more info visit http://www.safeguardguaranty.com.
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Hmm, divorce my spouse AND get a cash bonus? Wouldn’t that create an incentive for more people to “cash out” on their relationships? I DO like the idea of using financial incentives for more positive social outcomes, IF it can be done.
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When couples split apart, the financial consequences can be devastating. The protection of divorce insurance carries similar benefits to life insurance and should be adopted for the very same reasons.
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