Because All Mothers Are Working Mothers
Marriage insurance versus poverty ever after?
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
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
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
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.
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.
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 www.safeguardguaranty.com
Filed Under: Featured • Moms
To Work • What's
On Your Mind
Women Income Plunges 20% • John
Logan • Marriage
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