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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.       
How policies work
Divorce insurance is a form of casualty insurance; specifically, contractual liability insurance. As such, divorce insurance reimburses the owner after a marriage (the contract in this case) is dissolved by way of divorce or marriage dissolution upon finalization of which, the policy owner submits a claim to the insurance company.
Divorce insurance policies are sold in 'units' of 'initial claim value' or the amount which would be paid on the first day that a benefit is available. Each unit has a fixed price and the number of units purchased relates directly to how much the insured/beneficiary receives when a claim is paid. In addition, the initial claim value increases by a set amount every year after the elimination period ends so that the longer the insured stays in the program, the more money they receive should they divorce. The result is that over time, a small unchanging monthly payment could result in a substantial benefit payment.
To protect against adverse selection, Divorce Insurance policies have a lengthy ‘elimination period’ or a waiting period before a claim can be filed. Currently the waiting period for the standard plan offered by the company that provides Divorce Insurance is 48 months.
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