By Matt Allen
John Logan’s divorce battle was so contentious his friends called it “War of the Logans,” playing off the infamously bitter divorce movie “War of the Roses.”
“When it was over, I was broke, losing my home, about to lose my job,” Logan recalled. “I thought why isn’t there insurance for something like this?”
That’s where Logan’s idea came for divorce insurance, a form of casualty insurance serving as your financial safety net if your marriage fails.
WedLock Divorce Insurance is sold in units of protection with each $15.99 per month unit equal to $1,250 of initial coverage. You can buy as many units up to 200 and your benefits go up by $250 per unit every year after an initial waiting period.
I talked with Logan from his North Carolina office about the divorce insurance concept, the financial collapse divorce can bring, and why you should purchase it.
Q: Divorce is so prevalent, why hasn’t this product been offered before?
A: When you see millions of people would want a product, you know the market is huge and you ask why isn’t it already done yet? The chances are it’s not economically feasible. The history is this isn’t a new idea; it’s been talked about since 1971 and was originally offered in the 1600s in England as marriage insurance. But most of these policies were being bet on and seen as a wager so it was eventually banned.
In the modern times, it hasn’t been offered because the insurance industry hasn’t changed much in terms of business plans and the way companies are set up with underwriting restrictions and bureaucracy. When you sit down with a development group at an insurance company and tell them you have this product with a likely claim rate of at least 50%, the actuaries will go running out of the room. They want to introduce products to reduce the likelihood of claims being filed.
Q: If insurance companies are afraid of those claim rates, why aren’t you?
A: We’re not set up like a traditional insurance company. We don’t have heavy underwriting rules. There’s no catastrophic scenario. There’s no scenario where someone could break the bank by putting in one huge claim or a scenario like after Hurricane Katrina where everyone files a bunch of small claims at once.
Q: Prenuptial agreements for a long time had the stigma that they were a harbinger for divorce but I think that has largely been replaced by the notion that they can actually be a strength for the marriage, allowing couples predictability and a more secure future. Do you think divorce insurance has this negative stigma attached to it, like prenups did, and if so, do you see it eventually becoming more acceptable or commonplace?
A: Sure, I think there is a negative stigma to it and that’s expected. I think that will go away, though. When you talk to people who have already gone through a divorce like I did and understand the ruinous effect it has on your life, (divorce insurance) is a no-brainer for a second marriage and should be mandatory for third marriages and beyond because the odds are stacked against you that your marriage will succeed.
The average loss of net worth after a divorce is 77%. If I knew way in advance that a single event could cause my net worth to drop three-quarters, I would insure myself against it.
Q: What’s the reaction been? Have you been criticized for sort of betting on marriage?
A: It was expected that we’d get a lot of folks saying this is terrible, that you’re turning marriage into a business. The reality is in every state a marriage license is required, and it is a legal and binding contract that changes the financial status of both individuals involved for ever after. It can turn financially disastrous for one or both parties if things aren’t done to protect it.
Of the criticism we get, I can tell you 9 out of the 10 people have never been divorced or understand what happens after a divorce both emotionally and financially. The reality is 44% of families in the United States go below the poverty line at some point after a divorce. If we can give people the opportunity and dignity to stay out from below the poverty line due to a divorce, then it’s worth it.
Click the link to find out more information about WedLock Divorce Insurance.