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Protect yourself from a divorce... with insurance

WedLock Divorce Insurance ad

TEXT OF STORY

TESS VIGELAND: So as Kelly Chang mentioned, a pre-nup is one sure way to avoid financial ruin if your marriage ends. But there's a new option to protect your money and help cover the high cost of breaking up. Perhaps appropriately, it's modeled after the financial instrument you put to work after a car accident or if your house burns down.

It's insurance. Divorce insurance, to be specific. And it's the brainchild of John Logan, CEO of an outfit called WedLock Divorce Insurance. Welcome to the show.

JOHN LOGAN: Thank you.

VIGELAND: This is a bit of a bummer, I must say.

LOGAN: How so?

VIGELAND: WedLock Divorce Insurance.

LOGAN: Well, you know, the reality is that everybody hopes that their marriage is going to be happy and forever, but unfortunately statistics prove otherwise.

VIGELAND: All right. Well let's talk a little bit about how this works. What's the model?

LOGAN: The way it works is very similar to any other form of insurance in that you buy as much as you need based on what your budgets are. And the way that this works is that you buy it in units of coverage. Each unit covers you for $1,250 and each unit costs $15.99 per month. So you can buy anywhere from one unit -- or that $1,250 -- all the way up to 200 units, which is a quarter-million dollars. And the way this works is that's the initial coverage. And once the elimination period is over that coverage increases year over year. So the longer you're in the program, the more the value of the claim would be.

VIGELAND: So you're paying these premiums over time and if you get divorced, you get a payout?

LOGAN: Yes.

VIGELAND: So is that mostly a check against the possibility of having to pay spousal support and child support, or is it just merely that you'll have something to live on?

LOGAN: Well that really depends on the person's situation. There was a study done at Ohio State a few years ago that show people on average lose 77 percent of their net worth after a divorce.

VIGELAND: Wow.

LOGAN: This helps defray the cost -- whether it's legal fees or moving expenses, even therapy.

VIGELAND: So this really is very different from a pre-nup.

LOGAN: Oh yes. A pre-nup is an agreement between the two individuals about what happens when their marriage fails. It doesn't pay them anything. It just agrees on how to distribute their assets at the time of the divorce.

VIGELAND: What has the response been? What do a) folks think about it at a dinner party and b) how's the business?

LOGAN: Well, not surprisingly, people have taken both sides of the situation. And it really comes down to the individuals' experience. In a lot of cases, we hear from people who have never been married or are married for a long time and probably will never get divorced and they say what a terrible idea. But then on the other side, there's an awful lot of people out there that were divorced at least once and they say sign me up.

VIGELAND: Wow. I just don't even know how I would approach this conversation with my husband.

LOGAN: You know, it's one of those things that we've heard from attorneys that do a lot of pre-nups and stuff like that -- people should do post-nuptial agreements instead or something like this. And the reality is after you've been married for five, 10 years and you start to see cracks in the foundation of your marriage -- like infidelity or drug abuse or anything -- it comes down to the fact, people are going to say, maybe my marriage won't survive and they're going to go out and take a look at this on an individual basis.

VIGELAND: I have to ask how and why you came up with this idea. Are you divorced?

LOGAN: Well, yeah. If necessity is the mother of invention, then this is the poster child.

VIGELAND: Yeah, there you go.

LOGAN: What happened to me is about 10 years ago, I went through a world-class, ugly divorce. And after the dust settled, I took stock of where I was. And I was next to broke, I was about to lose my home. And I said to myself, 'Well, gee whiz, I can't be the only person that this has ever happened to.'

VIGELAND: Hardly.

LOGAN: So I really looked closely at the situation and being a serial entrepreneur that I am, I looked at it as an opportunity rather than a problem.

VIGELAND: Did you have a pre-nup first time around?

LOGAN: I did not.

VIGELAND: And have you had any occasion to make use of your creation? Have you remarried?

LOGAN: No. I'm actually engaged though.

VIGELAND: Oh, well congratulations.

LOGAN: And both of us will have a divorce insurance policy.

VIGELAND: You will. And what does your fiancee think of that?

LOGAN: This is her third time around, so she's all for it.

VIGELAND: OK. Experience teaches.

LOGAN: This is true.

VIGELAND: John Logan is the CEO and co-founder of WedLock Divorce Insurance. Thanks so much for your time.

LOGAN: You're very welcome.

VIGELAND: So are you horrified? Intrigued? Tell us what you think about divorce insurance by saying "I Do" to our Facebook page.

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maybe we should just accept that marriage is an outdated institution...atleast can we prevent anyone under the age of 25 from doing it? but then again its not marriage that we have to worry about its children born in and out of it...

If one loses nearly 80% of ones' net-worth via divorce and about half of marriages in the U.S. fail, would this mean (from an investment perspective) that getting married results in, on average, a financial loss (negative ROI ?) of ~40% of ones' net-worth? Seems like a decision to strongly counsel against!

First, I think it's important to recognize that the force of Logan's entrepreneurial efforts is philosophical more than anything else. (Perhaps this is true of all business innovation.) Whatever its business potential - which is probably great - Wedlock Divorce Inc. trades in deep ethical issues. There's a profound, if poignant, moral resonance in his story. The core idea of Wedlock Divorce, Inc. - that, in our society, marriage is unstable and that that instability can be exploited for profit - draws its power from the nuclear social reality that the name of the company captures: "wedlock" & "divorce": commitment & solidarity v isolation and fragmentation. Logan has put his finger on tensions in an existential business as usual that underwrites economic business as usual. In other words, he's not just playing a market, he's gaming a domestic ideology, an ethical system that's cracked and that continues to splinter under the forces of a pounding economy. I'm not positive, but I think the cracking & shattering of personal lives is good for business, especially his. Wedlock Ins. profits from intense pressure on private lives; indeed, the success of Wedlock Divorce relies on (even adds a quantum to), the current drubbing of domesticity in America. Isn't it the threat of disintegrating inter-personal bonds that creates his niche and motivates his clientele? Well, success breeds success. Econ 101. His thinking bears the mark of business smarts, to be sure; it's scarred with other smarting, too. Logan is every inch the entrepreneur; he's also every ounce the cynic. Part of me can't help but admire his unblinking insight as well as his resourcefulness. He offers the promise of wealth by monetizing marriage. Nonetheless, I find it difficult to think about his business in strictly market-analytic terms. If his was a public company, how would I go about assessing its promise? What's his product? Insurance? Insurance of what? Divorce. It seems as much ENsurance as INsurance. It incentivizes divorce. Inevitably, thinking about his business leads me to thinking about my own business . . . the part of my business that is, typically, nobody's business but my own. It' a question of hedges. I have tended to think - rather bucolically, I admit - of my marriage of 22 yrs as set in a care-tended garden, so to speak, and rimmed by a trust-trimmed hedge . . . . not hedged by a contract with a realtor. When we married, we invested in the ground, first, not in the potential (financial) yield; or, I guess I'd have to say, not in that kind of financial yield. Our security has been rooted in mutual regard, rather than the possibility of failure. Perhaps we'd have been better off doubling down our hope. But, ours was a blind love. So much for "traditional" domestic ideology. Logan uses a different calculus; a powerful -albeit a callous one. I am challenged by his idea. I can't say I wish him well. But, who am I to prefer, a priori, a society of people whose most basic relationship is based in trust, not calculation. Maybe the society he envisions and exploits is a smarter society, one less abused by nostalgic ideals.

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