Divorce Insurance

SafeGuard Guaranty believes there’s a $200 billion market
of people who could benefit from divorce insurance.

New coverage aims to provide benefits when partners part ways

If John Logan has his way, people soon will be able to purchase insurance for the potential financial devastation caused by divorce. Logan, the chairman and CEO of SafeGuard Guaranty Corp., an insurance company with operational headquarters in Apex, N.C., said he plans to offer divorce insurance internationally in early 2007.

“We’re on the tail end of funding, but everything else is ready,” Logan said. “I’m guessing six months or so depending on how fast we can come to terms with a few investors.”

The coverage will be geared toward rewarding people who have a long and successful marriage, but also will compensate those unfortunate enough to fall into the statistic of the 50 percent or so marriages that fail every year.

“Times have changed,” Logan said. “Divorce rates here in the U.S. haven’t changed much in 30 years, but the financial situation of the typical family has changed, and not for the better. Add the average cost of $15,000 to $30,000 in legal fees for divorce here in the U.S. and that’s a recipe for financial disaster. Most people overlook that. And it’s worse elsewhere.”

In a recent publication of the Journal of Sociology, Jay Zagorsky, an Ohio State University sociologist, followed baby boomers from youth to their 40s through the National Longitudinal Survey of Youth. Zagorsky found that on average, by their mid-40s, married individuals will have more than 75 percent more wealth per person than singles will, but the divorced are worse off, losing an average of 77 percent of their net worth.

Logan said other research points to the fact that divorce is the No. 1 reason for bankruptcy and poverty among single mothers.

“We will provide a financial safety net for the often devastating financial consequences of a failed marriage, but the biggest payout is for those policyholders that have a long and successful marriage,” he said. “We’re providing significant monetary incentive for our policyholders to stay married, but we know divorce rates worldwide aren’t changing for the better anytime soon. If we can prevent even one child from spending a life in poverty, all the monetary benefits pale in comparison.”

There’s little doubt the market is there for SafeGuard’s offerings, with an estimated 10 million marriages expected to end in divorce by 2015 in the United States alone. Logan estimated the market at nearly $200 billion worldwide.

“This is big money. I’m sure once the industry digests how we’re making this work, some major players will surely join in, but in the short term we’ll make our current investors very, very happy. And there’s still room for a few more,” he said.

Topics USA