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Because All Mothers Are Working Mothers

Marriage insurance versus poverty ever after?

julie | Comments 1


It’s no secret divorce is bad for a woman’s income.

When a couple divorces, the average income of the woman and her dependent children often plunges by 20% or more.

On the other side of the coin, the income of her now “unfettered ex,” who had been the family’s primary breadwinner climbs accordingly, The New York Times reported Tuesday.

So would you insure your marriage? Is this is such a crazy idea given the high number of divorces? One study showed that Americans were much more idealistic and romantic about marriage despite the high divorce rate.

Is insurance more sensible than a prenup for us working stiffs?

They were some of the questions we asked when we saw a company talking about introducing Marriage Insurance.

We put these questions to John Logan, chairman & CEO of SafeguardGuaranty.

I read that marriage insurance was banned in England in 1712. What is the situation in the United States now?

JL: Obviously this isn’t a new idea. It was banned in England because the Queen’s soldiers were buying policies on other people and in effect, gambling on whether certain marriages would last. Naturally, we won’t allow that. It’s never been offered in the US before and many of the various States’ Departments of Insurance have been very receptive because they understand the need.

Why would anyone buy marriage insurance?

JL: Insurance is a weird thing. In most cases you buy it and hope you never have to use it. And in nearly every scenario you’re happy to pay money in for years and years, and if you’re really lucky, you never get any of it back. What other kind of investment works backward like that? None.

Many people  buy life insurance, yet you’re 65% more likely to be disabled long enough to go broke before you die. Think about that for a minute. If you’re disabled and can’t work and don’t have any disability insurance, how do you pay the life insurance premium? Especially if it’s term life insurance, say goodbye to your life insurance, yet few people buy disability policies to protect their income. Insurance is often looked at as a “necessary evil.”

Our policies don’t work that way. We’ll pay our policy holders one way or the other, if they stay married or they get divorced always more than they’ve paid in and always (when compared with investments) at the equivalent of a great investment return. Win-win.

But the short answer to that question is that the first and most important reason that someone will buy Marriage Insurance will be to create wealth by investing in themselves and their marriage. Secondary to that is to preserve wealth by providing themselves with a financial safety net in the event they become a statistic of divorce.

Wouldn’t most people avoid the need for marriage insurance by getting to know each other better and marrying later before rushing to the altar/wedding registry?

JL:  It would be nice if statistics proved out what you’re thinking, i.e. that if people spent more time together before marriage that there would be fewer divorces, but the reality is that people who spend years getting to know each other get divorced at almost the same rate as people who’ve known each other for less than one year. I’m a perfect example, I waited until I was 39 before I married because I wanted to be sure beyond any doubt that I’d found the right woman, and we dated for 3 years before we got engaged. My marriage lasted 7 years. Circumstances change over time. And unfortunately, so do a lot of people.

Will it be open to either spouse?

JL: Yes. Policies are individually based. Either or both can buy policy.

Is it something both partners would need to approve?

JL:No. But based on our research that will be the exception, not the norm.

When will your program go live?

Probably early next year, dependent on how fast we close the remaining investment funding.

Is there a need?

JL: You be the judge.

Here in the US, according to a report released in April of last year, you and I as taxpayers help foot a bill of over $112 BILLION in Federal, State and local tax dollars spent each and every year to support fragmented families. On the average, according to a study done by Ohio State University, regardless of gender, people who suffer through divorce lose an average of 77% of their net worth (not even close to the ‘give your spouse half’ used as common wisdom).

As a result, 41% of American families spend some time below the poverty line after they suffer through a divorce. Some never recover. Of women who are forced onto welfare after divorce, 20% are still on welfare after 5 years. In fact, personal bankruptcies filed by women are up 700% since 1980 and while medical issues and loss of employment still top the list of reasons why, 40% of them list divorce as the main cause in their choice to file.

Globally, divorce is the number one contributing factor to bankruptcy and poverty among (newly) single mothers.

I can provide a library of studies that all point the same way, but it’s fairly simple to explain this way: Today we have the largest population of adults that grew up in broken homes, and study after study shows that people who come from divorced families are 3 times more likely to divorce themselves. Do the math. If we don’t change that trend, people who marry today will stand only a 33% chance of ever seeing their 25th anniversary.

Wouldn’t critics say that providing a pay out if a marriage went bust is providing an incentive to marriage breakdown?

JL: We’ve heard that before, and I’ll say what I always say to that premise. That’s hogwash.

A Marriage Insurance policy will provide no more incentive to get divorced than home insurance provides an incentive for you to set your house ablaze. People who have auto insurance don’t have a higher propensity to wreck their car because the cost of their car might be covered by insurance and in fact, people who have Marriage Insurance are probably LESS likely to get divorced since the benefit for staying married is so much greater. The reality is that anyone who’s gone through divorce knows that it’s a painful and extremely costly process that goes well beyond the simple loss of net worth. And the cash benefit that we provide, at any level, will hardly be considered a windfall when everything else is considered.

The fact is that when you realize that 40% of children born in the US in 2007 were born to mothers out of wedlock, it’s pretty clear we’re already experiencing marriage breakdown. Couples are choosing more and more to cohabitate instead of marry because the cost of divorce is so great. In the UK for example, the cost of divorce is more than the median income. Considering the statistics, that’s a recipe for financial disaster. Take away a lot of that potential risk of financial loss and many couples who are now cohabitating may choose to marry. Plenty of them will stay married.

Thanks John.

John Logan is the Chairman & CEO of SafeGuard Guaranty which will be the first company in the world to offer Marriage Insurance. Find out more information at

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Filed UnderFeatured • Moms To Work • What's On Your Mind

TagsDivorced Women Income Plunges 20% • John Logan • Marriage Insurance

About the Author: Julie Power is a writer and editor with experience in both the United States and Australia. After living in the United States for 16 years, she recently returned to live in Sydney with her husband and twin boys (9 years old). Follow @juliepower