Differences between Pre-Paid and Legal Plans

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. 
The other difference between the two schemes is related to your choice of 
attorney. In a pre-paid legal service, you get to choose from a restricted 
number of the attorneys in the network. By contrast, a legal insurance plan 
provides legal coverage regardless of attorney.  You are free to set up 
interviews with any number of attorneys and choose the ones you think will 
provide the best service for your personal legal needs.

Finally, pre-paid legal plans are much more accessible to the general 
public. Legal plans are harder to come by as only a limited number of 
insurance companies offer such arrangements.
 
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