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Home / Life / Auto – Why Not “Divorce Insurance” Too?

Home / Life / Auto – Why Not “Divorce Insurance” Too?

People buy insurance to protect their investment in their homes and cottages, cars, valuable personal items, and even to provide for their dependents in the event of their untimely death.

So why shouldn’t someone be able to buy insurance to compensate them in the event of divorce? After all, almost 40 percent of Canadian marriages end in divorce, according to Statistics Canada.

Although not yet available in Canada, a U.S. company called SafeGuard Corp. offers the world’s first “divorce insurance” product. It is called “WedLock”, and insures against divorce and provides $1,250 in coverage in exchange for a monthly premium of $16.

As with all insurance, rules and conditions apply: the insured must have been married for at least four years (although that can be reduced to three years with premiums adjusted accordingly.) Once the insured has met that four-year threshold, WedLock automatically adds $250 in coverage for every additional year the insured stays married.

Upon proof of divorce, WedLock will pay out a lump-sum cheque for the amount of divorce insurance purchased. Coverage includes the cost of retaining a divorce lawyer, child care, counselling, moving, and furnishing/setting up a new home.

SafeGuard’s website provides “Divorce Probability” and “Divorce Costs” calculators, to allow potential insureds to determine how much WedLock coverage they need. As further incentive, the site also provides an eye-opening live divorce “counter” (“There have been 401,684 divorces in the U.S. so far this year.”), and helpfully compares other insurable risks to the likelihood of divorce in the U.S.:

“What are the odds of your house burning down for example? About 1 in 300 in any given year if you go by statistics of annual house fires versus the number of individual households here in the US. A little higher for flood damage over the life of your mortgage, that’s 1 in 60. And actuaries using standard mortality tables peg the odds of you dying over any 20 years in your lifetime at 8 out of 1000 (or 1 in 125). …

Now let’s look at the odds of divorce. The odds that you’ll divorce if you’re on your first marriage are about 1 out of 3 (32%). Compare that to the odds that you’ll be in a serious car accident in the next decade – 1 in 4 according to the US Census 2010 Statistical Abstract. And auto insurance is mandatory.

For people already on their second marriage? Their odds of marriage failure are 2 out of 3 (67%). Third marriages and beyond are almost 3 out of 4 (72% fail).”

While the statistics are different in Canada, the increasing propensity for marriages to end in divorce is a reality in this country as well. Although the WedLock product may project a bleak outlook on marriage, pre-nuptial agreements – which have been similarly criticized for being “unromantic” – now have widespread use and merely provide prudent foresight and financial protection for divorcing parties, if and when it’s needed. (And in fact, if divorce insurance becomes popular in Canada, it could conceivably be one of the covered by a domestic contract).

Divorce insurance is not yet available in Canada.  However, our lawyers and staff at Russell Alexander Family Lawyers can provide customized advice on the repercussions of divorce, including the potential costs.  Visit us at www.russellalexander.com