Is divorce insurance the next step?

This is an interesting article I found through businessweek.com that talks about a possible new type of insurance being offered: insurance for divorces. What do you think about this? Do you think it sounds like a good idea? Read below and decide for yourself.



Divorce insurance could be coming soon
Date posted: April 23rd, 2010 5:05 PM
By Karen Caffarini, Life Quotes, Inc.

Insurance policies help keep people on a sound financial footing when all sorts of catastrophes strike – floods, death of a spouse, even job loss. One insurance maverick wants to add another catastrophe to the list—divorce.

“Divorce creates a financial burden on both spouses and families, especially women, many of whom find themselves falling below the poverty line,” says John Logan, chairman and CEO of SafeGuard Guaranty Corp. in Apex, N.C., who says he will have a divorce policy on the market within several months.

The benefits from divorce insurance would cover anything involved in the divorce proceedings ranging from legal fees to starting a new household.

“All we do is write the check, we don’t tell them how to spend it,” says Logan.

Logan’s policy would be sold as a surplus line product, which means that these products generally insure risks not covered by standard lines of insurance.

Surplus line products are specialty insurances provided by insurance companies such as Lloyd’s of London and Chubb Group of Insurance Companies that will cover just about anything at a cost.

Logan’s product would be offered to anyone willing to pay for it, including those with several divorces under their belt, but there’s a catch. The policy has a 48-month elimination period where the policyholder cannot file a claim, but would still be responsible for paying the premiums.

“It would work like a term policy in that it would pay once the divorce is finalized and only then,” explains Logan.

Logan says divorce insurance also shares similarities with property and casualty policies.


“The available claim amount increases over time,” says Logan. “It automatically renews every year and each year it goes up $250 per unit of insurance.”

Logan notes that there would be no incentive to hold on to the policy if the benefit didn’t increase.

“They would eventually find themselves under water and would get back less than they paid in,” says Logan.

Logan has not released rates yet, but says the cost would vary from less than $1 a day for a base policy of $1,250 to more depending on how much insurance the policyholder would want to buy. He adds that the product varies from $1,250 to $2 million in coverage.

Other insurance professionals and actuaries agree divorce is a catastrophic event and personal risk for the parties involved. Still, they wonder if Logan’s model will work, and if divorce insurance of any kind should even be offered.

“Insurance is meant to cover bad things that happen due to fortuitous events such as a fire, accident, etc. Divorce is not a fortuitous event; one or two parties are making that decision,” says Bob Wolf, an actuary for the Society of Actuaries (SOA).

Wolf says insurance works for two reasons: large numbers of clients and a proper pool of high and low risk clients. With a 52 percent divorce rate, the numbers are there. However, he says this insurance would attract those most prone to getting a divorce. “That’s where it would fail, actuarially speaking,” Wolf says.

Brian Ashe, past chairman of the Life and Health Insurance Foundation for Education, says there are questions surrounding Logan’s policy that should be raised: How can you be sure the policy is not misused by a couple in a financial pickle who will pretend to divorce just for the money; can you define the risks involved and can you design a policy that is responsive to those risks?

James Hunt, an actuary with Consumer Federation of America, was harsher. “It sounds actuarially unsound. It sounds totally improbable.”

Logan is not worried about possible fraud, saying divorce is a very expensive process that no one flippantly contemplates. He says there is no risk of running out of money to pay claims.

“Even if everyone got divorced on the same day, no one can make a claim in the first four years. That is a lot of revenue,” he says.

Insurance tips for divorcees
Ashe of the LIFE Foundation offers these five tips for the newly divorced.

1. It’s more important than ever to make sure both parents have life insurance policies with one or both including the children as beneficiaries. Ashe says the ex’s new spouse may not spend their life insurance money wisely, or name their own children or a new spouse should they remarry, as sole beneficiaries. This could mean your money would go to someone entirely different and leave your children out in the cold. If your children are young, he suggests putting money in a trust with a third party as trustee, until they become adults. This puts a trustee in charge of determining whom the money should go to and how that money should be allocated based on the wishes of their client.

2. Have your spouse obtain term life insurance, with you or your children as beneficiaries as part of the divorce settlement. Ashe says when a person dies, they no longer are responsible for child support payments. A term policy would provide money needed to fill that void. Ashe says the policy could be for five to 15 years, depending on the age of your children at the time of divorce, making it relatively inexpensive, especially if your spouse is healthy.

3. If your divorce agreement does require life insurance benefits for you, check annually to make sure the premiums are being paid, the policy is still in force and you are still the beneficiary. Ashe says the insurance company should send a notice if the premium is about to lapse.

4. Don’t forget group life insurance benefits through your employer. Ashe says people often forget to change their beneficiary on these policies after divorce, which means the children could end up being disinherited.

5. Buy long-term care insurance. Because women usually live longer than men, more of them end up in nursing homes, which could cost $6,000 to $7,000 a month, Ashe says. This would ensure you don’t end up impoverished in your final years.

This article was originally published at Life Quotes, Inc.

Scams resulting from Obama's healthcare reform

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Health care reform scams on the rise

by: PHIL MULKINS World Action Line Editor
Friday, July 23, 2010
7/23/2010 7:40:15 AM

Dear Action Line: Does the new health insurance reform law require seniors to buy something called "Obama-Care Supplemental Insurance?" My mother was approached about this outside her church by a man in a suit and tie. — L.T., Tulsa

ObamaCare scams: Health insurance reform was just signed into law March 23, and already scam artists are using this to trick consumers into buying bogus health-insurance products and services, says a consumer alert issued April 16 by Arkansas Attorney General Dustin McDaniel. He has received reports of this taking place in Arkansas, meaning it is likely such scams will surface here as well.

One involves "insurance agents" going door to door, selling policies, claiming they are "with 'ObamaCare' " and "representing the Federal Government." These strolling tricksters exclusively target seniors at their front doors, uninvited and not expected.

They say the consumer "must purchase some type of insurance policy to meet coverage requirements" citing the new health care reform law. The consumer is then sold an insurance plan. The consumer is often told the insurance must be purchased within a limited-enrollment period that ends soon. The consumer buys unnecessary, inappropriate and overpriced insurance and has given out personal information that might be used fraudulently.

No G-man insurance: McDaniel warned consumers that neither the state nor federal government is going door to door selling insurance and it is not calling people to sell insurance. Beware of high-pressure sales tactics and the phrases "limited-time offer" or plans "required by the new health care act." If someone claims to be a government representative and you are uncertain of his identity, ask to see credentials, or simply say "no thanks" and close and lock the door.

Scare e-mails: A rash of bogus e-mails concerning the health insurance reform act is circling the Internet. See Politifact.com's "E-mail 'analysis' of health bill needs a check-up" at tulsaworld.com/healthinsscareemail.

Skinny on health insurance reform: See "Frequently Asked Questions about Health Insurance Reform" at tulsaworld.com/faqhealthinsreform and Oklahoma Insurance Commissioner Kim Holland's webpage "Patient Protection and Affordable Care Act" at tulsaworld.com/oidppaca. For an independent point of view see the Foundation for Health Coverage Education info on the health insurance reform act at tulsaworld.com/hce.
Original Print Headline: Health care reform scams on the rise
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Submit Action Line questions by calling 699-8888, by e-mailing phil.mulkins@tulsaworld.com or by mailing it to Tulsa World Action Line, PO Box 1770, Tulsa, OK 74102-1770.

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Insurance Issues

I have heard rumors of huge rate increases in homeowner rates from some of Oklahoma's largest insurers. State Farm and Farm Bureau are the latest to file for double digit rate increases. Check your policy before renewal.

Points of view Sam Kinison would appreciate.

-- It is
> stunning how we waste water in
> this country when so many poor Africans have to walk 10
> miles just to get a
> drink of clean water. They would think it was terrible that
> you were wasting
> the water. Then again, I would probably tell them to move
> where the effin
> water is and stop walking so much. They live in stick
> shacks anyway -
> carry the sticks to the water and set up shop there. If
> it bothers you so much
> to waste water I think you should only bathe once a
> month.

Random thoughts from a Waitress

We were
> talking about working at
> restaurants and tips, when Karen began to talk about how
> she made tips
> “back in the day.” She said she used to make
> a lot off of the
> drunken chicken fighters who came in after the chicken
> fights. Now either she
> used to waitress down in Mexico
> or in the U.S.
> back in the roaring 20’s. Waitresses here in
> Stillwater
> wait until game days to make the really big tips;
> waitresses at the Lucky 77
> Café bide their time until the second Saturday of every
> month for the drunken
> cock fights

Office Thoughts from my Nephew

> Is 4:45 p.m.
> to late to fill up my
> cup with water? There’s no way I’m going to
> drink it all before I
> go home. 2 days ago I wasn’t paying any attention
> to the time, because I
> actually had something pressing to finish, and I filled up
> my cup way late in
> the day. Come 5 o’clock, I’m pouring out an
> entire cup of cold,
> refreshing H2O that’s so crisp I nearly tear up as I
> watch it tumble into
> the burnished metal sink, which some diligent soul has
> polished to a high sheen
> simply so I can abuse its dry serenity with my wasteful
> water. It was nearly
> as horrid as pouring out fresh beer, yet not nearly as
> frowned upon here in
> Stillwater