We live in a world where we must be prepared for anything. We have insurance on our homes so they will be repaired or replaced in the event of a fire or other disaster. If we are in an accident in our car, our insurance pays for medical expenses for the injured and repairs for the automobiles. We have insurance for when we are sick, for cleaning our teeth and to bury us when we die. So, it should not surprise us to find there is insurance to cover certain expenses incurred after a divorce.
Isn’t That Bad Luck?
You may feel like taking out divorce insurance while you are married is asking for trouble. But is it really? The fact is in 39% of the marriages in the United States in 2020 (to date) ended in divorce. There have been recent years that the percentage rate has been as much as 50%.
When you decided to get married, you probably took a look at your life insurance policy. Is it bad luck to make sure your spouse is financially secure in the event of your death?
It is the same for divorce insurance and homeowners’ insurance. Insurance is just a safety net and a layer of security.
How Does Divorce Insurance Work?
Divorce insurance is not insurance that pays you in the event that your marriage fails and you end up in divorce court. There are a lot of people who might wish this is true, but it is not. After a couple has gotten a divorce and their court fees and divorce fines are paid, their divorce insurance is active. You pay a premium based on the amount of the package you choose monthly. Just like other insurances (like most life insurance policies), there is a waiting period. The waiting period for divorce insurance is usually four years. This is why it is wise to take out insurance before you need it. The policy just sits in limbo unless and until you need it.
Divorce Insurance has only been around since 2010. It has been well received and today most insurance companies carry divorce policies. However, some policies are better than others. Call your insurance company and inquire about theirs but don’t be afraid to compare. Just make sure you are comparing like plans.
Fast forward to the fifth year of marriage. Statically, 20% of marriages end in the first 5-years. In the divorce, the judge will assign child support orders and spousal payments. These financial responsibilities are in effect unless a judge changes them. For example. Maybe your child support payment, which is based on your income is $4000 per month. This is affordable for you. But then COVID-19 hits and you are laid off. $4000 per month is more than you get on unemployment. Until you go back to court and have a judge change the order, you still are required by law to pay $4000 per month!
This is where divorce insurance comes in. Your divorce insurance steps in and pays the child support until you can resume paying the $4000 per month or getting the court order changed. It is the same for spousal support. The payments you made together, as a family, now ensure financial stability. There is no resentment because the insurance premiums came from family funds. It gives the person who is laid off relief and the spouse and primary caregiver of the children relief. It is a win/win situation.
Money is a major problem in divorce. Temporary loss of income is devastating, but divorce insurance covers that. It’s a shame that all money issues can’t be settled as easily as this one. Divorced families would be so much kinder to each other when their money was secured and their payments were coming in, right on time. Divorce insurance may sound a little strange. But, if you think about it, it really is an act of love.
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