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Health Insurance Claims a Pain– Take Out Divorce Insurance–Risk Management Assessments Reach a New Low With Ethics

Posted Aug 06 2010 9:43am 1 Comment

One more element entering in the insurance business and gee just when the institute of marriage today is in the news, now this?  It appears you can somewhat bet against your decisions on picking partner for life.  This kind of tell me we have a business here that’s up front telling you that you don’t have the sense in this world today to find a partner, you think?  image

Anyone that has been through a divorce knows it is not a process anyone looks forward to with all the legal proceedings it involved so now you can add on more more headache here with filing a claim, good luck!  In case of a claim denial the attorneys stand to make some additional money here too as they can fight that for you. 

From the website:

“For as little as $15.99 a month3, Prime Insurance Company will pay you from $1,250 up to $5,000,000 if your marriage ends in divorce.

Even if you have a pre-nuptial agreement in place you’re still at risk!  Imagine having every penny in your bank accounts removed, all your credit cards canceled, and every piece of furniture and all your belongings removed from your house while you’re at work.  Then imagine having to pay thousands of dollars in attorney fees to fight to get only half of it back! It happens more than you know!  Like Term Life Insurance that has no cash value until you die, Divorce Insurance has no cash value until you’re actually image divorced8, so it cannot be stolen by a greedy spouse

Get the same peace of mind that comes with being able to afford a team of expert lawyers ready to work on your behalf, or the simple fact that you will have enough money to get far away fast if the need ever arises.  Is this just not precious to get a “risk analysis” on your partner of choice!  The deal here is though is that the policy doesn’t come into play and mature for 48 months, so if you are unhappy after a few months and want to cash in here, you have a 4 year waiting period.  I’m sure there’s been some long statistical analysis done here to choose this as the faltering point.

Here’s an online algorithm if you want to calculate what your divorce costs would be. No insurance plan is complete today without “those algorithms”.   Health insurance companies make their living from them. 

image[8]

Like any other insurance company, guess what, there’s a portal where you can log on too, gee how convenient and where did this idea come from.  This is literally a “broken heart” portal that feels sorry for your financial problems-right!

In the world of ethics today is appears it’s getting worse and there’s one more way here to use some algorithms to get your hard earned money, this is how the big corporations have managed to do all of this today, as when you stop and think about how decisions are made, the first thing we do is run to our computer screen for information and software tools.  You can be judge on this for yourself but I think taking out insurance that is gambling on the fact that you are going to stay in wedlock a minimum of 48 months, and with a rider you can reduce down to 36 months is ridiculous. 

Being this is brand new they have 4 years before any payoffs are to be realized, so plenty of time for them to start bankrolling premiums.  BD

Safeguard Guaranty Corp. , an insurance start-up based in North Carolina, recently released what it’s billing as the first world’s first divorce insurance product . Here’s how its WedLock product works.

The casualty insurance is designed to provide financial assistance
in the form of cash to cover the costs of a divorce, such as legal proceedings or setting up a new apartment or house. It is sold in “units of protection.” Each unit costs $15.99 per month and provides $1,250 in coverage. So, if you bought 10 units, your initial coverage would be $12,500 and you’d be paying $15.99 per month for each of those units. In addition, every year, the company adds $250 in coverage for each unit.

Then, if you get divorced and your policy has matured (see below for the maturation rules), you would send Wedlock proof of your divorce. In return, you’d receive a lump sum of cash equivalent to the amount of coverage you had purchased.

So how does the company prevent people who know they are going to get a divorce from signing up? To prevent that kind of adverse selection, the policies don’t mature until 48 months after their effective date (though people can purchase additional riders to reduce that maturity period to 36 months and to get their premiums back if they happen to divorce before the policy matures).

Divorce Insurance (Yes, Divorce Insurance) - Bucks Blog - NYTimes.com

Comments (1)
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Barbara, 

While you may think a divorce insurance policy is ridiculous, you might find that many of the 44% of families that go below the poverty line as a result of divorce (Julia A. Heath and B. F. Kiker, “Determinants of Spells of Poverty Following Divorce” Review of Social Economy, 50) here in America would disagree. I’m going to take a wild guess and say that you’ve likely never been through the financial disaster that so often occurs with divorce or you’d already know that on average people lose 77% of their net worth as a result of divorce (Jay Zagorsky, National Longitudinal Survey of Youth study findings, Journal of Sociology, Ohio State's Center for Human Resource Research). And unfortunately, women are hit the hardest. In fact, absent remarriage, the typical divorced woman can expect her standard of living to stay near the poverty level for an extended period, and this drop cannot be explained by selection effects (causes) into divorce (Pamela J. Smock, Wendy D. Manning, and Sanjiv Gupta, “The Effect of Marriage and Divorce on Women’s Economic Well-Being” American Sociological Review, 64). And many never recover. About one-fifth of women who apply for welfare benefits for the first time do so because of divorce or separation and about one in four mothers who were first propelled onto welfare by divorce are still welfare-dependent five years later.  (Johanne Boisjoly, Kathleen Mullan Harris, and Greg J. Duncan, “Trends, Events, and Duration of Initial Welfare Spells” Social Service Review).

 

Tell them divorce insurance is a bad idea.

 

In addition, while it’s clear that you dislike insurance companies as a whole by the comments you make about the insurance industry’s use of algorithms and its spiraling slide of ethics, you might find it surprising that I agree with your point of view. Which is why your readers should be appalled by your lack of even cursory research into our product’s development or the management team that makes up our company and the disparaging implications you make regarding our ethics, denials of claims, our use of calculators (none of which were developed by anyone even remotely connected to the insurance industry) and some non-existent “broken-heart portal” you mention without a shred of any fact based evidence.

 

I’m sure you’ll also be surprised to learn that this product was not developed within the insurance industry as some new method to suck money from the wallets of unsuspecting policy holders, in fact, it wasn’t developed within the industry at all. It was developed based on my own dreadful experience with divorce long before I started in the insurance industry. And had you taken the time to better understand the product, you’d know that it has no underwriting restrictions so filing a claim consists of sending their court stamped divorce decree along with a copy of their policy. If their policy was in force (meaning paid as agreed) when they divorce, the likelihood of any denial of claim is nil. We don’t think that’s asking too much and I’m sure the general public will agree that can hardly be described as a “headache”.

 

With regard to our ethics, I’ll let history be the judge of that since clearly, you know nothing about me, my team or our motives. However, I think most will agree that if we can keep even one child out of a life of poverty for even one day, all the monetary benefits pale in comparison. If you think our methods to accomplish that goal are unethical, then mea culpa.

 

And regarding your statement that “It appears you can somewhat bet against your decisions on picking partner for life.  This kind of tell(sp) me we have a business here that’s up front telling you that you don’t have the sense in this world today to find a partner, you think?”  We’re glad you’re such a great judge of character, but if you look closely at all your friends and family, do you really and truly think that every one with a failed relationship is that bad at picking a life partner? And somehow, you’re immune? The reality is that circumstances change and people change along with them.

 

No one can predict the future and the risk of divorce is real and tangible, in fact you’re more likely to divorce in the next decade even if you’re on your first marriage (1 in 3) than you are to get into a serious car accident (1 in 4) yet few people realize it. We hope you don’t but we’re here to help you if you do.

 

The bottom line is that we know WedLock Divorce Insurance isn’t for everyone, but I challenge you to better understand our product and our company before you make such uninformed assumptions and lump us into this group of insurance n’er-do-wells that you think the insurance industry is made up of. We’ll let the market be our judge.

 

John Logan – CEO, SafeGuard Guaranty Corporation
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