This past week, a colleague in the collaborative practice community, Chris Chen, a CDFA (Certified Divorce Financial Analyst) in Waltham, Massachusetts, told me about a company offering divorce insurance. As someone involved in the business of both divorce and marital mediation I was intrigued. I couldn't resist taking a look at the company's website.
Here's what I found: WedLock Divorce Insurance is an insurance product marketed by SafeGuard Marketing Management, Inc., a division of Safeguard Guaranty Operations, Inc., which itself is a wholly owned subsidiary of SafeGuard Guaranty Corporation.
The company, a North Carolina-based start-up, was formed by John Logan, a former victim of divorce. Logan's own personal experience with divorce proceedings served as the catalyst for developing this new product. Offering the insight that most divorces "don't happen overnight", Logan's aim is to give people "a realistic and affordable way" to protect their net worth in case of divorce. The divorce insurance basically provides coverage based on the number of "units" purchased and is payable after a 48-month waiting period. This is essentially a "pre-existing condition" provision, the pre-existing condition being that your marriage is on the rocks, and you and your spouse hate each other. (The waiting period can be reduced to 36 months by purchasing an "Accelerated Maturity Rider").
In order to get paid after the divorce, all you need to do is send a copy of your court decree to "Claims Direct Access" in Sandy, Utah. You can use the money for anything - even a post-divorce vacation with future spouse #2. However, it is unclear whether the divorce insurance proceeds might have to be shared as "marital property" with the ex-spouse, especially if earnings during the marriage paid for it.
The parents of a spouse can buy a WedLock policy for their child. What a thoughtful wedding gift that might be, although it may cripple a good in-law relationship.
You can apply and pay for the policy online, and you won't even have to take the "Divorce Probability Calculator" test on the site to qualify for coverage. (More about that below.)
The coverage consists of "Units" in the amount of $1,250 each, with an automatic increase of $250 per unit per year, a very nice feature. Each unit costs $15.99 per month. The sample contract on the firm's website shows that for 15 units of coverage (payout of $18,750), the cost to you is slightly under $240 per month. ("Hey, honey, marry me, but I'm spending $240 a month on this little insurance policy. I hope you don't mind!")
The maximum policy is 200 Units ($250,000 of coverage) and would cost about $3,200 per month. Due to the cost, the insurance is probably mainly used to pay legal costs and not to replace assets taken by the rapacious ex-spouse in the divorce proceeding. In fact, 10 or 15 units of coverage might nicely pay for a Collaborative Divorce, which is a very nice way to go if you're getting a divorce.
According to the website, WedLock policies are underwritten by a number of insurance companies, depending on where you live. These are the so-called excess & surplus insurance lines which provide unusual insurance. Reasons for this include insurance offered by new entity, a new kind of coverage, or one with an inadequate loss history or unusual risk. E&S policies are not written by standard, licensed insurance carriers subject to state regulations.
According to the video on the WedLock site, its insurance is not available in North Carolina, Kentucky, Oregon, or Pennsylvania. By the way, in case you're interested and would like to make extra money, you can have the "ability to earn unlimited income through" by selling WedLock Divorce Insurance through SafeGuard's Partner Affiliate Program.
I loved the website. It contains wonderful information about divorce: its causes, factors, and statistics, all nicely researched. There is a divorce cost calculator, which helps you estimate how much your divorce hair cut will cost.
The site is actually kind of upbeat and not depressing at all, especially if you think you are far from divorce. I loved taking the "Divorce Probability Calculator" which tells you how risky your marriage is. This happens immediately online. You only have to give the company your name and email address in order to take the test and get your results. After you take the test, WedLock electronically delivers a very nice report which explains the results.
The Divorce Probability Calculator relies on the 20 factors that research has shown are significant in the success or failure of a marriage. These include key elements such as educational level, age at marriage, cohabitation before the marriage, whether it is a second (or third) marriage, the existence of children from a previous marriage, and unemployment of a spouse.
I put the factors that are present in many of my married friends into the "Divorce Probability Calculator": casual drinking, religion "not important", having cohabited during marriage, and "regularly arguing" with your spouse. The result was not good - a score of 92. That hypothetical person would have a "Very Strong Probability" of divorce. The result noted, "The news is not good." But on a more encouraging note, it posed the question, "Does that mean you should never get married because you're almost guaranteed to get divorced? Certainly Not! You may end up happily married forever after... but statistically, the odds are against you".
Then I adjusted the factors, thinking that maybe my friends didn't "regularly" argue, but "occasionally" argued. I hoped this would greatly improve the results.
Unfortunately for my friends, the score went down only to 72. They are at risk of losing their marriages, their homes, and in general, getting a divorce "hair cut". If they are marital mediators who help people improve their marriages (www.maritalmediation.com), this might be somewhat professionally embarrassing for them, too. Many of my friends had previously thought their marriages were strong, and loved their spouses. Now it has become my duty to warn them and inform them otherwise.
When I put "rarely argue" into the factors, the score got better - a 63. But I thought the couples who rarely argue are the ones who - surprisingly to all their friends and family - end up in divorce court.
Then I began to wonder whether 92 was really a bad score, or if the results continued beyond 100. I put in some additional unfavorable factors to test my hypothesis. In addition to "regularly argue", I added high school (not college) education, the existence of step-children in the marriage, and unemployment. At that point the result was 150 points. It was a still "Very Strong Probability" of divorce (the same as when the score was 92), but I was given this advice:
"Does [this] mean you should never get married because you're almost guaranteed to get a divorce? Certainly not! In your case, we very STRONGLY [emphasis in the original] recommend that you adjust your budget to ensure that you can cover yourself against the unexpected. In any event, we wish you the best of luck!"
For all of you who take the "Divorce Probability Calculator" on WedLock's site, I wish you the best of luck, too. Based on the results, you might seriously consider buying WedLock insurance.
© Laurie Israel 2011.