Pre-Paid Services vs. Legal Insurance

Pre-Paid Legal services offer specific services for a reduced price. You pay your annual fee and the plan pays the lawyer bills. Legal Insurance can also include coverage of specific legal services, but its main function is to protect an individual against all legal costs.

Legal insurance will reimburse the policyholder or pay on behalf of the policyholder all fees, costs, and expenses for legal services including court judgments, up to the policy limits.

In addition, legal service insurance will provide bail money, something most pre-paid legal services do not provide.

Legal insurance will also pick up where your auto or home insurance leaves off. For example, if you are sued for recovery of damages in a car accident because they exceed your insurance limits, legal services insurance can kick in to protect you.

Legal insurance also does not restrict your choice of attorneys to a network, but rather will provide coverage regardless of which attorney you select. However, legal insurance is much harder to obtain in most states because few insurance companies offer it. Pre-paid legal plans are much more accessible to the general public.

In addition, if you sign up for a legal-services plan with your employer as part of workplace benefits, the legal services are covered under the federal Employee Retirement Income Security Act (ERISA). This federal regulation is a guideline to how employee benefits are managed and provided to employees.

Choosing your attorney from the network list is up to you, so you'll want to do a little homework before making your selection. If you already know an attorney on the list, it makes it easier, but if you're looking at a list of strangers, it's buyer beware. You can contact your state bar association to find out if complaints have been filed against particular attorneys. If the plan you've joined has other members whom you know or work with, you can ask them for references. Groups and employers that offer these plans should have researched law firm or attorney backgrounds before selecting them, but it always pays to back that up with your own research.

Make sure you review your existing insurance policies before selecting your pre-paid legal plan. Some legal protections and defense costs may already be covered, and you don't want to pay for coverage twice. For instance, your car insurance protects you in the case of car accidents with liability and medical coverage. Your home insurance covers you in the case of injuries on your property. If your policies already include these, don't pay for them again in a pre-paid legal plan.

Pre-paid legal service plans are available to individuals or families through legal service organizations and sometimes through churches, educational institutions, alumni associations, business groups, credit unions, and employers.