Divorce insurance

And now for something completely different… divorce insurance!  What will they think of next?

Advising clients on financial matters arising out of the breakdown of the marriage frequently involves a discussion of insurance. A policy with a fat cash surrender value is another asset to be haggled over, and any policy covering the life of a spouse who is no longer insurable can have considerable value. Then too, where a separation agreement includes an obligation to pay child or spousal support, we sometimes bargain to have the paying spouse take out a policy of life insurance to provide alternative funds, in the event of their demise.

Recently however, we've been astonished to hear about a spate of new insurance products targeting divorcing couples.

Only available so far in the UK (thankfully), is a policy offered by a company called New Start, wherein you can purchase insurance against the possibility that your ex-spouse may become unable or even unwilling to pay child support. In addition to providing replacement income the policy will also pay legal fees for you to chase your miscreant spouse. The policies, called "divorce maintenance protection insurance", seem to contain a lot of provisos, so it’s difficult to assess how useful such insurance might be

Not to be outdone, California, the source of many things outlandish, has gone a step further with companies actually offering divorce insurance. The concept there is that you pay a premium for various units of coverage up to $250,000.  In simplest terms, if your marriage comes apart the insurance company cuts you a cheque for the policy amount.

We are predicting that this type of insurance will be a long time coming to Canada, since in this jurisdiction, at least, a policy of insurance purchased during the marriage will be considered a family asset that has to be shared with your spouse.

All's fair in marriage and divorce.