Is Divorce Insurance a Reality?

Everyone has insurance to protect investments in their homes, cottages, cars and other valuable assets. Insurance is even used to help provide for dependents in the event of death.

According to Statistics Canada, over 40% of Canadian marriages end in divorce. Given this reality, should someone be able to buy insurance to compensate them in the event of a divorce? While it hasn’t become available in Canada yet, one U.S. company called SafeGuard Corp. is now offering the world’s very first “divorce insurance” product. This divorce insurance has been named “WedLock,” and it both insures against divorce as well as provides $1,250 in coverage for a monthly premium of $16.

Just as with all insurance, rules and conditions still apply. Anyone wishing to be insured by WedLock must have been married for at least 4 years. If that threshold has been met, WedLock will automatically add $250 in divorce fee coverage for every further year the individual stays married. Once the insured individual provides a proof of divorce, Wedlock will refund a lump sum amount in accordance with the amount of insurance purchased.

Coverage includes aspects associated with separation and divorce including the cost of retaining a divorce lawyer, counselling, childcare, as well as moving and setting up a new residence.

In addition to divorce insurance, SafeGuard’s website offers “Divorce Probability” and “Divorce Costs” calculators. These calculators allow potential buyers to determine exactly how much WedLock coverage they need.

The site also provides a live divorce “counter,” which compares other insurable risks to the likelihood of divorce in the U.S.

About 1 in 300 individuals experience a house fire in any given year according to the statistics of annual house fires as compared to the number of individual households in the U.S.    1 in 60 experience a household flood during the life of their mortgage. Further, actuaries using standard mortality tables have identified that the odds are 8 in 1000 that you will die over any 20 years in your lifetime.

Compared to these statistics, the odds that an individual will divorce during their first marriage are about 1 out of 3 (32%). In contrast, the odds that an individual will be involved in a serious car accident is 1 in 4 according to the U.S. Census 2010 Statistical Abstract. Individuals in their second marriage jump to a failure rate of 2 out of 3 (67%). Third marriages bump up to 3 out of 4 (72%).

Canadian statistics differ slightly, however, the failure rate for marriages is increasing. While the WedLock product may seem pessimistic, pre-nuptial agreements are now commonly used to provide financial protection for divorcing spouses.