A recent news article mentions the requirement in Egypt to purchase divorce insurance and that actuarial studies will be put together for this. From a purely actuarial point of view, this is an interesting product as we need to make assumptions such as to moral hazard as well as probability of divorce by length of marriage. As far as we are aware, there are few statistics available which will help us. There are divorce plans available from the US where there is a four-year waiting period in order to minimize moral hazard. This time, period seems reasonable as a start, but we will need to dig deeper. In terms of rates of divorce, there are plenty of statistics, but statistics split by number of years married is perhaps much less available.
From a purely needs point of view, I love the idea of divorce insurance as many of the needy families I work with in my food bank operations have divorce as an underlying issue. In Malaysia as well, there are many pain points with respect to getting support from the ex-husband and stress on the part of the bride’s family when getting married. This product would be very useful to reduce concerns. However, culturally will it be easy to sell divorce insurance, or perhaps we need another way to market this?
In our mind, an integrated product assisting the spouse would be ideal. Such a product would include coverage upon death of the husband as well as upon divorce, and maturity benefits at the major wedding anniversaries such as after 5, 10, 15 and 20 years. Perhaps the plan itself would be 25 years, to provide a maturity amount upon the silver anniversary of the couple. This would also ensure coverage throughout the childbearing ages until the children are either grown up or nearly grown up. The product could have automatic increases in death as well as divorce protection upon the birth of each child to align the protection needs with the insurance and have single premium options. Single premium options can be useful as an ‘add on’ to the dowry.