Should You Sign up for Legal Insurance Through Your Work?
Many employers offer legal insurance that will cover your legal fees when the need arises for a small monthly fee. Since lawyers can be expensive, legal insurance seems reasonable, but is it worth the cost?
What is covered by legal insurance
Legal insurance plans (also known as prepaid legal plans) typically cost between $ 9 and $ 30 per month. With this type of service, you can email, call or meet with a lawyer in person for advice or representation. Legal services can include wills, trusts, divorce, traffic violations, consumer protection, alimony, and property protection (such as disputes with a home owner).
A prepaid legal membership can be beneficial for people who need simple paperwork or legal advice at a relatively low cost. As with health insurance, legal insurance subscribers have access to a range of online service providers that offer discounts on potentially high costs. Unlike health insurance, there are no co-payments or deductibles . Some plans may give you a discount (usually 25% or more) on non-covered providers and extended coverage for your spouse or dependents.
Limitations of legal insurance
As with many types of insurance, the devil is in the details. While the benefits seem impressive, many plans offer essentially low-cost services, such as telephone consultations, a cursory review of legal documents, or a well-written letter to a company or agency.
However, when you put on splints on some important points, such as representation in a divorce, you will likely be charged a higher insurance premium and the service may include limits on the number of hours of representation you can request. And you can still pay certain costs out of your pocket, such as filing fees, expert witness fees, and court reporters’ fees.
In addition, many basic plans do not (or do not fully cover) certain legal services, such as contested divorce, bankruptcy, or criminal defense such as drunk driving. When more active representation is needed, such as in a contentious divorce, you can only get a discount on what will still be an expensive lawyer.
Also consider what other types of insurance you have. For example, car or homeowner insurance may already cover some legal costs and offer better coverage. It’s also worth noting that most plans will have a waiting period, so you won’t be able to take advantage of your benefits right away.
Is legal insurance worth it?
Some legal insurance critics don’t think the annual costs are paying off. As critic Dave Ramsey put it :
I tell people not to buy this. The prepaid legal fees are around $ 300 per year. That’s about $ 3,000 over ten years. The average American consumer does not spend $ 3,000 in ten years on legal fees. If the average American who handled prepaid legal services on average spent over $ 3,000 on legal bills over a ten-year period while accepting $ 3,000, prepaid legal services would be bankrupt. They will pay more for legal services than they receive their fees.
Instead, I would recommend that you have a good spare fund. If it becomes necessary to hire legal services, you will have the money to pay for it. You are self-insured in case you need a lawyer. On average, you will do better.
It’s hard to find reliable information on how much the average American spends on legal fees, but a 2015 estimate put that amount at $ 250 a year . This does not mean that the legal costs will not surprise you or that the service will not bring you peace of mind. But knowing how much you can spend (and what is already covered) will help you decide if insurance is worth you.