If you are going through a divorce, it may pique your interest to know that divorce insurance may be a possibility. That’s right, you read correctly, divorce insurance actually exists!
Divorce insurance is one of the latest products to be rolled out by the insurance industry. The question now becomes, what exactly it is and who should consider getting it.
Story Behind Divorce Insurance
A man named Richard Zizian, a legal educator with a juris doctorate, collaborated with Great American Insurance Group to develop a new program called Marital Settlement Agreement Insurance, or “MSAI.” Zizian had gone through a divorce himself and understood the full emotional impact it can have on the spouses and their children. He claims this emotional toll makes a person more susceptible to getting laid off from work.
The term “divorce insurance” is actually misleading. Instead, MSAI works as a supplement to unemployment insurance. Divorce insurance provides financial coverage in the event a spouse providing loses his job and cannot meet his or her spousal support and/or child support obligations. In other words, it doesn’t insure you against getting a divorce, but is rather meant to insure you in the event you are unable to pay support because of getting laid off.
How Divorce Insurance Works
Divorce insurance is sold in units. For each unit you buy, you will get a certain amount of coverage. For example, your plan might cost $16 per month for each unit purchased, which in turn will give you $1,250 in coverage. So, if you buy ten units, you will pay $160 per month and will receive $12,500 in coverage. In most cases, the insurance company will also add an additional amount in coverage each year for each unit purchased.
If you get divorced and your policy has matured, you will receive a lump sum payment equal to the amount of coverage you purchased. You can use this money to help defray the costs of your divorce.
The Key is the Maturation Period
The key in divorce insurance coverage is determining when your policy matures. Most MSAI policies do not mature until 48 months after the purchase date. Some insurance carriers allow you to get “riders” to reduce the maturation period to 36 months. A “rider” would also allow you to get back your premiums if you get a divorce before your policy matures.
Downside of Divorce Insurance
Like all things, there are some downsides you should consider before purchasing a divorce insurance policy. One major downside is if you never get divorced, you will lose out on all the premiums you paid for the policy. An alternative may be to put the money you would have otherwise been paying into an interest-bearing account that you could use in the event of a divorce.
Another big downside is that most divorce insurance policies are not covered by any state fund in the event the provider goes out of business or bankrupt.
Call an Experienced Central Valley Divorce Attorney
If you are going through a divorce or planning to file for divorce, it is important that you have a knowledgeable attorney fighting for your rights. For more information or to schedule a complimentary consultation with a Central Valley divorce attorney, please call Gurjit Srai (209) 323-5558 or (559) 449-1447, or complete our online form.