It is quite common to look for insurance policies or health, property, car, business and so on. Well, but nowadays people are also looking for insurances for divorce which is done to insure against the often disastrous expenses associated with messy divorces.
What is Divorce Insurance?
This is a type of contractual liability plan that pays the insured cash benefit if divorce happens. In such policies, clients can make monthly payments into an insurance plan, which pays out if their marriage ends. The purpose of such insurance is to minimize the risk of incurring significant financial loss due to a divorce proceeding. It is a smart plan as it will help you to deal with the financial loss with confidence and smartly. Ending a marriage and going through the legal process can be too described as horrid. Insurance might ease that pain.
Such policies are designed in a manner that it complements prenuptial agreements, not replace them. With insurance you can easily handle the cost of divorce associated with hiring a lawyer, forensic accountants, private investigators, expert witnesses, bodyguards and anything that can be important for a divorce case.
Do you need such insurance?
When looking for a suitable insurance on divorce, you need to understand what the experts have determined are the top causes of divorce. They are getting married young, major cultural or religious differences, negative fighting/communication styles and money differences. Of you think any of these reasons for divorce can happen in your life in future, and then you must consider such insurance policies. Consistent, honest communication regarding money and finances before and during your marriage should be an integral part of your insurance policy.
It is not something you should consider if you are currently in a divorce proceeding or if you think that divorce may be on the horizon for you.
Who can buy such policies?
These types of insurance policies are sold as individual policies. You can apply for a policy either before or after your marriage. There are usually no restrictions as to who qualifies for the policy but you need to be at least 18 years old. You can buy a policy for yourself as well as your children. There are different types of policy packages that you can buy from a reputed company depending upon how much you can afford. Usually there are certain qualifications and riders to policies that you need to fulfill before buying one.
Any insurance policy on divorce will charge you a premium commensurate with the benefit amount. The premium will basically depend on the nature of your policy. These policies are sold in ‘units’ of ‘initial claim value’ or the amount which would be paid on the first day that a benefit is available. Each unit has a fixed price and the number of units purchased relates directly to how much the insured/beneficiary receives when a claim is paid. The longevity of the policy is directly linked with the amount of money you will receive after the termination of your marriage.
Currently, each unit of such policies is valued at $1250 at a cost of $15.99 per unit. For instance, if you bought 10 units of insurance; it would cost you $159 a month. After four years of marriage if you find yourself heading for divorce, you would get paid out $12,500 in the end.
Policy holders can buy up to 200 units of insurance which is $250,000 in coverage. After the required 4 year waiting period is over, the policy goes up in value every year by $250.00 per unit.
How to claim your policy?
You can claim for your insurance by submitting your court stamped divorce document whether it is a divorce decree or marriage dissolution decree depending on which state or county you reside. This means claims made by you in regards to your policy will be paid by the insurance company only after the termination of your marriage is finalized. It is must for the policy holder to pay all legal fees and other expenses in advance of the divorce.
To protect against adverse selection, such policies have a lengthy ‘elimination period’ or a waiting period before a claim can be filed. Currently the waiting period for the standard plan offered by the companies dealing with such polcies is 48 months. So,when getting such an insurance policy try to act as a smart consumer and always check all the details before signing up for a policy.
There are certain disadvantages of such insurance policies that you need to be aware of before considering one for yourself. The biggest drawback is that if you never get divorced, you will lose out on all the money that you have invested towards your insurance. As an alternative, you can open some account and keep money there that you would have been paying towards your insurance premiums. If the situation of divorce arises you can always use this money. But you must not forget that during the divorce process, your spouse will also get a portion of that money.
Another disadvantage of such insurance plans is that most of these policies are not covered by any state funds that would honor them if the provider goes bankrupt.
Why you need such policies?
The actual cost of divorce process itself can be pretty staggering. Even an uncontested divorce with no children and little to fight over can cost as much as $6,000, depending on the quality of the attorney you retain. This is why people prefer to buy a suitable insurance plan on divorce for financial security at the end of a divorce case.
To conclude, you can easily get dissolution of marriage insurance policy for yourself. But before getting one you need to sure that you can pay the premiums.