Expect the unexpected.
That’s what insurance is for, right?
Well, why not apply this to legal troubles?
Lawyers’ fees can stack up when you’re in a legal bind. But what if you could save money and still get the legal help you need? Learn all about legal insurance.
What is Legal Insurance?
Legal insurance goes by many names:
Group legal services insurance, prepaid legal services, legal protection insurance, legal expenses insurance, etc.
Whatever you want to call it, legal insurance is prepaid protection that provides you with attorney access in the unexpected event that you find yourself in a legal dispute.
Legal insurance is a good option for those who may not want to wait to fork over a fortune for a lawyer once the dreaded time comes.
You likely don’t even think about contacting a lawyer unless you need one, right? Chalk it up to human nature.
The vast majority of people who may need legal help at some point, some 76% report not knowing a lawyer to call.
Prepaid legal insurance is a solution for those who may possess the foresight to keep an attorney’s advice at the ready.
But where do you find legal insurance?
Often, you can find legal insurance plans through your employer.
Many companies offer policies to individuals.
Either way, legal insurance comes at a low monthly fee. Often, you can find plans as low as a few dollars a month.
What Does Legal Insurance Cover?
Legal insurance can cover a variety of legal needs, from seeking a few minutes of advice over the phone to reviewing documents like a will or trust to attorney hours billed to a case.
Imagine yourself in any of the following situations. There’s likely a legal plan for it.
Divorce
Divorce is, historically, the most common way people use their legal insurance.
With the majority of marriages ending in divorce, millennials have grown allergic to marriage.
Perhaps, as a result, divorce issues are now often excluded from legal insurance policies.
Estate Planning
Estate issues are the second most popular use for prepaid legal services.
You’ll need an attorney to help you get your estate in order. From wills to trusts to powers of attorney, estate planning is one area where you don’t want to wing it.
Buying or Selling Property
There are many legal loopholes to consider when entering real estate deals.
From contracts to appraisals, any real estate transaction should have the input of an attorney.
Civil Disputes
Civil cases can run the gamut from neighbor disputes to copyright infringement.
If you find yourself as a defendant in a civil case, many legal insurance policies will have you covered.
Auto Accidents/Personal Injury
Car accidents can create a world of damage.
From the destruction of your car to severe injury, you may find yourself needing a lawyer to file a claim on the other party’s insurance.
This goes for non-auto accident personal injuries as well.
From slip-and-falls to boating accidents to dog bites, there exist many threats to your body out there.
Note that not only can a legal insurance policy cover you as the plaintiff, but also as the defendant in such matters.
Criminal Charges
You may find yourself on the accused end of something criminal, like a drug charge.
You may have severely messed up, or you may be innocent.
Either way, legal insurance policies may cover you in certain criminal cases.
Medical Billing Issues
According to some studies, medical debt is responsible for two-thirds of all bankruptcies in America.
Surprise medical bills can ruin your finances, and having invested a few dollars in a prepaid legal plan can pay off big-time if you ever find yourself in this situation.
Bankruptcy
Not only will you need a lawyer to file for bankruptcy, but an attorney’s representation can help you negotiate your way out of a consumer bind.
Consumer representation is one of the understated work an attorney can do.
From negotiating credit card debt to disputing certain charges, prepaid legal plans can provide an attorney who can represent you as a consumer.
IRS Audit
Whether you are a business or not, an IRS audit can ruin your finances.
Attorneys working through prepaid legal plans often find themselves representing individuals or businesses in IRS audit cases.
The IRS doesn’t waste their time with just any debtor, so when they come knocking, you better be ready with an attorney by your side.
Tax Issues
Why not avoid the IRS altogether?
Tax issues, from preparation to legal business questions, can involve tax attorneys just as much as accountants.
Prepaid legal plans often include attorneys who specialize in tax law.
Identity Theft
In a cybercrime world, identity theft is becoming more and more rampant.
All you did was go shopping at your favorite retailer. Sometimes you did nothing at all.
Then all of a sudden, your name is on a slew of credit cards unknown to you.
Identity theft has become such a problem that you can get separate insurance for it through some companies.
A prepaid legal attorney can help you take preventative measures so that an ID theft incident won’t rock your world.
A lawyer can also help you after the fact if you have suffered losses due to ID theft.
Can Legal Insurance Plans Save You Money?
With average plans costing anywhere from $15 to $50 a month, the potential savings are immense.
Legal fees, even for relatively innocuous services like legal advice over the phone or contract reviews, can add up to the thousands.
Having this lifeline covered can save you a fortune in hourly fees.
Additionally, the valuable advice you’ll receive can mean you avoid expensive mistakes by knowing what your legal standing is in any situation.
As with most insurance plans, there may be deductibles involved. Be prepared to spend up to a few hundred dollars for a deductible, depending on the program.
What Does Legal Insurance Not Cover?
Just like any insurance coverage, there are some limits to prepaid legal plans.
First of all, not every situation listed above gets automatic coverage via legal insurance.
It depends on your plan, so it’s essential to shop around to see what coverage you anticipate needing.
That said, most legal insurance plans don’t cover the following:
–Most divorce cases
–Suing an employer
–Cases involving someone who is insured by a similar legal insurance plan
–Worker’s compensation or unemployment compensation claims
–Most small claims court cases
–Class action lawsuits
Additionally, when it comes to legal advice, most prepaid legal insurance does not cover:
–Matters involving foreign, or non-U.S.-based law
–Advice on business matters if you are covered under a plan intended for an individual
–Post-retirement advice, if covered under an employer-based program
The Waiting Game
Also, don’t forget that most prepaid legal plans require you to pay into the program for some time before taking advantage of the benefits.
It’s not uncommon to have to wait six months or more before being able to use your plan.
Legal Insurance Companies
Some insurance companies offer prepaid legal plans as part of their services.
Many companies specializing in legal insurance exist, including:
–Legal Shield
–Legal Zoom
–Arag Legal
If you are a consumer searching for a legal plan, these are the first places you’ll look.
You will want to also check with your employer to see if they offer a prepaid legal service as a benefit.
If you are an attorney looking for leads, you can find legal plan leads here.
What To Look For In a Legal Insurance Policy
Now that you know the basics of what prepaid legal coverage is, what do you look for in a plan?
As an employee seeking coverage through your work, your options may be limited. Still, you will want to investigate to see what tiers are available.
As an individual shopper, you may have more options. Here is what to look for in a policy:
1. Affordable Deductible
A standard deductible for a self-paying individual can be around $250.
While this may sound steep, in the long run, it could potentially save you several hundred, even thousands in legal advice alone.
2. Network
How large is the attorney network?
Similar to health insurance, your legal insurance will include an area network of attorneys.
Examine the options you’ll have. Are you in an area where many attorneys are participating?
Often, the more attorneys who participate in the network, the more options you’ll have, and the more likely there will be help available when you need it.
3. Coverage
What legal coverage do you have? Some plans will cover more types of law than others.
If you go in anticipating what you might need, you’ll have a better sense of the plans that will work best for you.
Failure to Plan
If you are like the vast majority of Americans, you are not ready for a legal battle.
Legal insurance will help you prepare, affordably, for legal issues that you may not see coming.
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