Divorce Insurance

Divorce Insurance

One important part of the financial planning process is conducting a risk assessment. That means checking your insurance coverage to see if it is currently meeting your needs. Do you have enough life insurance if you were to die early? Do you have disability insurance to replace your income if you get sick and can’t work? Do you have auto and home insurance in case your properties are accidentally damaged? If you are married, do you have appropriate divorce insurance?

Divorce insurance. You heard it right. Just when you thought payday lending was the sleaziest way to make a buck, there’s now a company peddling a product called Wedlock, meaning that, for $15.99 per month, you can purchase units of divorce insurance. Each unit will pay a benefit of $1,250 in the event you divorce your spouse. It’s true a sucker is born every minute, but let the kid who was squawking next to you in the nursery trying to stick his pacifier in his ear buy the Wedlock product. You should follow these steps to set up your own divorce insurance program.
Do not enter into marriage blindly
A marriage vow is a solemn pledge. If either the bride or the groom has even a remote connection to a faith tradition, marriage vows are usually made in a place of worship, before God. If you’re looking for a sermon on the morality of upholding those vows, you won’t get it here. If you want a warning on the financial devastation that not keeping those vows can wreak, then you’ve come to the right place.

A divorce between two people with no children and a moderate net worth should be a pretty painless financial event: “Let’s go see a divorce mediator. You go your way and I’ll go mine.” But when kids are thrown into the mix, you’re talking about child support and the cost of setting up two households. If there’s a woman who has been out of the workplace for some time, then she’s going to be looking for a big chunk of her spouse’s savings and earnings during their married years. There could be an acrimonious battle and the process could take some time. If the family was struggling financially before the divorce, then the divorce could very well lead to loads of debt and possibly bankruptcy. So before you get married, you need to know who you are and know who your spouse is -- and know what love means. Your relationship might seem like a fairy tale at first, but before you tie the knot, remember what the great Russian writer Dostoevsky said: “Love in action is a harsh and dreadful thing compared to love in dreams.”
Understand what causes divorce
During the financial collapse of 2008, you may have heard the term “moral hazard.” Moral hazards exist when people with insurance take greater risks than they would without it because they know they are protected. So let’s say you own a home. You have gasoline-soaked rags in your basement and no smoke detectors. Someone points out to you that this could lead to your house being destroyed in a fire. Your response: “It’s OK. I have insurance.”