It is quite common to see the terms 'legal insurance plans' and 'pre-paid legal services' used interchangeably. This is indeed an oxymoron, as their similarities - and differences - are quite numerous if you come to think of it.
Both these terms refer to an arrangement whereby you pay a fixed monthly or annual fee in exchange for certain legal services. The objective is to save you the cost of high legal fees, but the services offered under each type of plan are quite different.
Pre-paid legal services can help in a number of ways, but some of the most popular include drafting your will or trust, reviewing a contract, having a legal letter written for you or simply getting legal advice by phone without any charge. Premium services, i.e. services that are not part of the pre-paid plan's coverage, will be charged at normal rate, but some firms still make it a point to offer discounts nonetheless.
Legal insurance, in many ways, is very similar as health or automobile insurance you may be more familiar with. Although some legal services may be offered, this plan takes the form of a policy that covers all legal services when you need them. And just like the above types of insurance, this policy can only cover so much for your legal services, or reimburse a certain amount of money either to you or to the provider. Some of the features of this plan that are not part of pre-paid legal plans include coverage for bail or fees as a result of court verdicts.
The protection against loss or liability on other insurance plans is another integral feature of the legal insurance policy. For example, if your auto insurance has already run out and you have an accident and are sued for damages, your legal insurance plan will protect you.
There is yet another important difference between the two, and this is with regards to selecting a lawyer. A pre-paid legal service would only allow you to choose lawyers who are part of their network, and this is usually limited to one firm only. There are no such limitations for legal insurance, where coverage still exists regardless of your choice of lawyer or law firm.
The advantage of pre-paid legal plans is the fact that they are so easy to sign up for, as most well-known law firms offer them to clients. Legal insurance is not offered by many insurance companies, and may have more stringent access requirements.
Now that you know the differences, the ball is now firmly in your court. Ask yourself several questions first before deciding, such as how much you can afford to pay, what leagal problems you have or are expecting to have, and how often you may have to ask for a lawyer's assistance. Regardless of your decision, you will need to make one, as having legal protection can give you much-needed peace of mind.
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