What Is a Prepaid Legal Program?

And Does it Make Sense for Me?

What Is a Prepaid Legal Program?
March 11, 2014

Prepaid legal programs have sprouted up all across the country within the past decade. From Legalshield and Hyatt Legal Plans to Pre-Paid Legal Services and ARAG Legal and Financial Solutions, Americans have a wide menu from which to select. If you anticipate needing the services of an attorney, you should think carefully about whether a prepaid program will benefit you.

  • What a Prepaid Legal Program Is - Prepaid legal programs are a form of insurance, much like health or auto insurance. These programs offer several legal services, such as document review, discounts, legal document preparation and access to several legal forms, should you need them. Prepaid legal services also usually offer free preparation of a basic will. If your legal needs are simple, a prepaid program could be helpful.

  • Prepaid Legal Program Features - What are the features of these programs? Depending on what you may purchase, you’ll be able to obtain legal services from a specific network of attorneys in your community and/or state; membership grants you access to a documents and legal forms database, allowing you to download and print out the forms you need; and you get "free" legal services, such as document preparation. Because of your monthly legal services premium, you’re actually paying for those "free" services.

  • Program Benefits - A prepaid legal services program can benefit you when you find that you need the services of an attorney. Just like health insurance, pre-paid legal benefits vary, depending on provider and cost.

    In many programs, you're allowed unlimited phone consultations with an attorney for a set monthly price. Thus, a simple call to a network attorney can provide the answers you need to basic legal questions. For more complex legal issues, this service alone can offset the full cost of membership.

    Most programs also offer substantially discounted access to network attorneys if these phone consultations alone don't solve your problem. Consequently, in-office visits, contract review and preparation, even divorce and litigation services, can be provided for less than you would pay if you were not a program member.

  • Prepaid Legal Program Drawbacks - You’re limited to a specific menu of services for which you pay your monthly premiums. Whether you find you need to use the services of a network attorney several times in a calendar year or not, your premium is the same. In another calendar year, you may find that you’ll only use the service once or twice.

    Pre-paid legal programs have many of the same drawbacks of HMOs (Health Maintenance Organizations) in the health insurance industry. You’re limited to a formulary of prescriptions, which are likely to be generic. You are only allowed to see specific doctors within your plan and additional medical procedures are approved on a case-by-case basis.

    It's the same with prepaid legal programs. You're able to use a limited set of services. Other services are covered, but you have to pay for a portion of the legal fees while the program covers the remainder. If you find you have a legal need that isn't covered by your program, you're required to pay an attorney full cost for that service. If you need more extensive coverage, such as for a drunk driving defense, this level of membership requires you to pay more for that type of legal services program.

  • Some Sensible Alternatives Rather than buying a prepaid legal services plan, you have other alternatives that require only a one-time payment. Depending on your legal needs, websites such as Legalzoom or Nolo can help you with paperwork and the preparation of legal documents.

Because need for legal services varies from one person to another, a legal services program can only offer limited value. Depending on the type of services you need, you may be better off visiting websites or hiring an attorney outright.

If you decide to pay for a prepaid legal program, it would be a good idea to automate the payments of your monthly premium, so that you never miss a payment. Missed payments can lower your credit score and will reflect on your credit report for years to come. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

Photo ©iStockphoto.com/WesVanDinter

  Conversation   |   0 Comments

Add a Comment

By submitting you agree to our Terms of Service
$commenter.renderDisplayableName() | 11.27.20 @ 08:22