Marriage insurance, or really divorce pension for wives?

This news about proposal to create so called marriage insurance (but really divorce insurance) could have been ignored but for the fact that this idea about divorce insurance is proposed by Chief Justice of High Court of Andhra Pradesh, and it has been supported by highest insurance regulatory body in India, the IRDA.  So when the biggies are behind some force-the-divorce idea, we have a nagging suspicion that the divorce/domestic violence industry could be behind it.

Let’s look at some basic background information about marriage/divorce insurance.

Divorce insurance is a form of contractual liability insurance that pays the insured a cash benefit if their marriage ends in divorce. The purpose of divorce insurance is to mitigate the risk of incurring significant financial loss as a result of a divorce proceeding. As divorce rates have increased around the world, divorce has become a major contributing factor to bankruptcy and poverty globally which in turn created the demand for such a product.


So the definition above doesn’t say about any particular gender/sex in marriage to be the sole beneficiary of such insurance.  Either husband or wife can take up a divorce insurance to safeguard their financial future.  That’s the theory, but who are we kidding!  Let’s read an excerpt from above-mentioned news below:

Apr 20, 2014, 03.44AM IST TNN

HYDERABAD: AP high court Chief Justice Kalyan Jyoti Sengupta on Saturday advised the Insurance Regulatory and Development Authority (IRDA) to impress upon the government to bring in a legislation making it mandatory for all marriages to be insured.

This will ensure happy marriages and offer protection to women in the unfortunate event of the breakdown of the marriage, he said while speaking as a chief guest at an insurance awareness programme organized by IRDA here. If a marriage is insured, then the wife need not suffer on account of a negligent husband who evades paying alimony to her, the CJ said.

While IRDA chairman T S Vijayan thanked the CJ for his suggestions, R K Nair, member of IRDA’s F&I wing appreciated his ideas and assured him that they will take up the matter with the government.

So the proposed insurance is supposed to provide much needed protection to wives in cases where the evil husbands divorce their helpless wives to search for new brides, get more dowry etc!  Except for the fact that 85% of divorces in India are filed by women.  So who’s leaving the marriage for greener pastures?  Women, isn’t it? But the honourable chief justice of AP high court couldn’t be bothered about these minor details.  After all, any time and any forum is a good place to be seen backing women empowerment.  And what can be more empowering for married women than divorce?  Successful marriage, anyone?

Marriage Insurance: problems abound

Let’s now look at some other problems with above proposal.  A simple thing called moral hazard which any insurer needs to worry about.

For example, after purchasing automobile insurance, some may tend to be less careful about locking the automobile or choose to drive more, thereby increasing the risk of theft or an accident for the insurer. After purchasing fire insurance, some may tend to be less careful about preventing fires (say, by smoking in bed or neglecting to replace the batteries in fire alarms).

So moral hazard in the case of above proposed divorce/marriage insurance will be that wives who have no commitment to marriage and who want to enrich themselves at husbands’ expense; will marry for the sole purpose of collecting the insurance cheques coming at the end of divorce.  They will have to thank the Chief Justice of AP for this wonderful product called marriage insurance.  And of course, you can count on the domestic violence/divorce industry participants to be the supporters and cheerleaders behind this whole enterprise.

Another problem is that of adverse selection.  People who intend to be committed to life long marriage have no use for such an insurance.  But those wives who prefer to keep that DIVORCE OPTION just in case, will readily agree to let their husbands pay the insurance premium (of course, who else will pay!) which can be encashed after they initiate divorce.  With new amendments proposed to Hindu Marriage Act like Irretrievable Breakdown of Marriage (IrBM) (already passed in Rajya Sabha), divorce after 3 years of separation will become a REALITY for wives. Divorce insurance will only add one more benefit to the never ending benefits of divorces for wives.


Just divorced

Above: Just divorced, and on way to collecting the insurance cheque!


Better alternatives to divorce pension for wives

The fact that this so called marriage insurance is not much in vogue anywhere should tell us something about the efficacy of this useless proposal.  As seen at Wikipedia:

Currently, Yangguang Life insurance company?China? is the only company in the world offers a form of Divorce Insurance. Originally, the insurance was marketed by the inventor of the product, SafeGuard Guaranty Corporation under the brand name of WedLock Divorce Insurance and sold in the United States through a fully licensed surplus lines carrier. Their website was[8] which now redirects to SafeGuard Guaranty Corporation’s home page. The company’s website explains “WedLock policies are not currently available, but we are actively looking for underwriting relationships that will help us relaunch and move to the next phase which will also provide for a long term ‘Successful Marriage Benefit’ for those policy holders that do not divorce, thereby financially incenting them to stay married.” No other company in the world has offered any form of marriage or divorce insurance.

If at all the government needs to meddle in people’s lives and continue with its social engineering experiments, then instead of allocating resources towards guaranteeing divorce pension to wives, they need to create incentives to lifelong and long marriages.  The basic ideas behind these measures can be of the following kinds, though this is an area which needs much debate and discussion before arriving at concrete laws:

1. A fund will be established to benefit the institution of marriage.  Alternatively, the measures can be implemented using taxation policies which discourage divorce by charging tax on divorce initiating party (man or woman), or divorcing couple in case of mutual consent divorce.  Only in case of proven divorce based on cruelty, the party at fault will pay this divorce tax.

2. Married couples for life should get financial or other benefits: the longer the marriage, the more the benefit.  Similarly, more benefits can be there for couples with children; structured in a way to incentivize raising of good future citizens, rather than dysfunctional and maladjusted children of divorced parents.

3. Divorcing couples, especially with children, should be solely or significantly paying into the premium pool and those who stay married should pay nothing or pay very less.  If done using tax laws, the divorcing couples have to pay tax but married couples should not have to pay anything, and instead might get higher benefit for each year of continued marriage (keeping in mind the children raised too).

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