Protect yourself from a divorce... with insurance
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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?
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.
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.'
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.