It is not uncommon to see the terms “legal plans” and “pre-paid legal services” used interchangeably. While they share a lot of characteristics in common, there are a number of differences you should be aware of. Both of these terms refer to an arrangement whereby you pay a fixed monthly or yearly fee in exchange for legal services. The idea behind them is to save consumers on high legal fees whilst offering a valuable service. That’s where the differences lie: what kind of service is offered and what is covered. What are you entitled to in both schemes?
Pre-paid services cover for specific legal services: free phone consultation and advice, drafting of simple wills and trusts, review of sample contracts and writing of letters on your behalf. Legal services not provided will get charged at regular attorney fees, but you may be eligible for discounts.
Legal insurance, by contrast, works much like other insurance plans, like health or car insurance. Although specific legal services are offered at times, your insurance provider will typically offer a policy that covers for all legal services. The policy will pay on behalf of you, the policy holder, or reimburse all expenses, costs or fees that you pay for legal services up to the policy limit. For instance, your policy might reimburse any fees incurred in your court judgments or pay your bail money – a service not provided by most pre-paid legal plans. Your legal insurance is also pegged to other insurance policies you may already have. If you run into legal problems involving your other insurance, then your legal insurance policy will protect you against loss or liability. For instance, if you are involved in a car accident when your auto-insurance has already run out and you are subsequently sued for recovery of damages, you will be protected by a legal plan insurance.