Insurance is about preparing for a disaster like an accident or fire. John Logan would like to convince us that divorce is just one of those disasters. He is the founder of WedLock, the world’s first marriage insurance company. John likes to point out that according to statistics 50% of marriages today end in divorce, when they do 40% of couples drop below the poverty line as a result. Studies also show that in a divorce, on average, people lose 77% of their net worth. His insurance product costs $15.99 per month per unit of insurance. Each unit is $1,250 worth of insurance. Each year this limit of insurance will be increased by $250 per unit and the premium will never go up. At the time of a divorce the policy will pay out the accumulated premium in a lump sum. The idea is that, the lump sum can be used to pay for relocation, legal or any other costs related to the divorce. John Logan says he created the product because
“… about 10 years ago, I went through a world-class, ugly divorce. And after the dust settled, I took stock of where I was. And I was next to broke, I was about to loose my home. And I said to myself, ‘Well, gee wiz I can’t be the only person that this has ever happened to.’”
Certainly no one wants to be in the position he describes. Is this product really the answer? Well, let’s do the math. It is $15.99 a month for $1,250 worth of insurance which is $191.88 a year. Let’s say you want $5,000 worth of coverage; that cost $63.96 a month or $767.52 a year. Now what if you bought just one unit and your marriage lasted 2 years. You would have paid out $384 and you would receive a lump sum of $1,750. Ok, so subtract the pay out from what you paid in you netted $1,366. Not bad, I guess. What about, if you bought the $5,000 and the marriage lasted 10 years? Your final pay out would be $15,000 and you have paid $7,672 over that time in premiums. Is this a good bang for your buck? You will have to decide that.
John Logan hopes that in the future most couples will invest in something like this every time they say ‘I do’. The hope is it will become part of standard prenuptial agreements or be purchased by worried parents to protect their children. I guess in a world where divorce is such a probable outcome of marriage this kind of product would be appealing.
Personally I am dubious of the actual value of these policies. The concept may be sound, but it seems to me that you are paying quite a lot of money and getting a pretty low return on your investment. Not to mention that premiums may put it out of the price range of many new couples. In truth it may just be that, I am a romantic at heart and buying one of these policies seems like betting against your marriage and future happiness. Still, as with the choice of a spouse, it’s all up to you!
-Rebecca L.C. Hoell-
Opinions expressed here are not that of Morrill Insurance but of the employee who wrote them.
The insurance product you’re referring to, Wedlock Divorce Insurance, is no longer on the market due to a breach of contract by the underwriter. We are, however, in the middle of raising capital to fund our own insurance company that will underwrite a new (and vastly improved) policy called Marriage Assurance. Marriage Assurance, while still providing the same financial safety net that Wedlock Divorce Insurance provided (for people whose marriages fail) will shift the focus to richly rewarding successful marriages. Marriage Assurance policies will provide the investment equivalent of 5.7% compounded over 25 years. In short, policyholders will receive a decent investment return if they divorce and a much better investment return than is available from any guaranteed investment product today, if they stay married. Win – win. I’ll be happy to explain the details to you, or anyone else who might be interested. Feel free to contact me via our website, http://www.safeguardguaranty.com.