What is Divorce Insurance?
In insurance industry parlance, Divorce Insurance is a form of casualty insurance. In this case, the 'casualty' being your potential of unrecoverable financial loss as a result of a divorce proceeding. Simply put...
Think of Divorce Insurance as a financial safety net if your marriage fails.
In effect, Divorce Insurance reduces the risk that your individual/personal financial situation will be negatively impacted by legal fees and other costs associated with divorce. It does NOT insure against divorce itself - only you and your spouse can do that - but it does afford you the security that if your strong and healthy marriage turns sour and toxic, any money spent during your divorce will be reimbursed to the degree that you are covered.
How do you buy it?
Divorce Insurance is sold in units of initial insurance protection. Each 'unit' is equal to $1,250 in cash of initial coverage. And by "initial coverage" we mean that is the lowest amount of cash benefit you would receive if you file a claim.
So, for example, if you chose 10 units, your initial coverage would be $12,500 ($1,250 x 10 = $12,500) or if you chose 80 units, your initial coverage would be $100,000 ($1,250 x 80 = $100,000).
More importantly, the good news is that (after the elimination period ends) your benefits go up by $250 every year and your premium will NEVER increase. So someone with an initial claim value of $12,500 could eventually get as much as $62,500. To see exactly how your benefits increase over time, create a model policy and click the “Show Me How My Benefits Grow Over Time” button.
How much does it cost?
Each unit of WedLock Divorce Insurance℠ premium is sold for $15.99 per month. That's less than 53 cents a day per unit. Considering that you could easily spend 10 times that on a cup of premium coffee these days, we're pretty sure you'll agree it's affordable to anyone.
How much should you buy?
That depends on a number of factors, not least of which is what your personal financial situation is like. Remember, you don't have to be rich to go broke. In fact, the average loss of net worth after a divorce is 77% and what's worse, 44% of families go below the poverty line for some period of time after a divorce.
Click here for more information on the cost of divorce.
The average cost of just legal fees for a divorce in the UK is £13,000 (Source: The Independent) in the US this ranges from $15,000 to $35,000 depending on where you live. If the divorce is protracted with custody or equity battles, £40,000 or $100,000 in legal fees is not out of the ordinary. Think of it this way. Let's say you have $100,000 sitting around in your savings account and (excluding all the other actual costs associated with divorce that quickly add up to that 77% loss of net worth) your legal fees are $35,000. That may not bankrupt you. But what if you're an average person and don't have $100,000 in the bank...or maybe you only make $100,000 a year...or maybe you only make $40,000. Then it's a much different story. It’s worthy to note that a recent survey conducted by Dutch Bank ING Direct stated average readily available UK savings of £2,205, whilst the Bank Of England state a figure of £23,500 although this includes high net worth individuals. (Source: e-banking.co.uk)
A generation ago the average family looked a lot different. They also didn't have a mortgage that ate up 30% of their income, or an average of £8,716 (Source: creditaction.org.uk) in credit card debt, nor did both parents usually have to have full time jobs to pay their bills. The landscape of the average family today is much different and even if you're debt free, and financially secure, that doesn't mean you're immune. Plenty of wealthy people have to go back and start from scratch after a divorce.
A lot depends on your budget. If you can afford enough coverage to maintain your current lifestyle, then that's the way to go. However, if your discretionary cash only allows for the purchase of a couple units, some protection is better than no protection. And don't forget that your benefits grow over time.
For more information click here for Frequently Asked Questions
Or click here to model a policy for yourself