Thursday, January 24, 2008

Legal service plans - are they worth it?

The other day, on the topic of wills, I mentioned that I have a legal service plan, and that is the low cost option route we used for our wills. Today, I'll talk a little bit about them in general, and the reasons I picked the company I did.

First, a legal service could be considered similar to an HMO, but for your legal expenses. Basically, you pay a monthly, or yearly fee, to have access to an attorney or law firm, for defined benefits. Some have no further expenses to them, others have deductibles. Some are worth the money, others are nothing more than scams.

Almost all of them offer some type of consultation services (by phone or in person), letters written on your behalf, wills, traffic ticket defense, document/contract review, and discounts on other more intricate legal procedures. Some will even offer civil, and in certain cases criminal, lawsuit defense, as well as IRS audit help. I know of at least one company that even offers identity theft restoration services.

Now, I'm sure you're probably thinking, why would I need this, I've never used an attorney before. Am I right? Most people think that, not because they did not need one, but because they were priced out of being able to afford one for their situation. Most people have had to make a financial decision, not a legal one. But what would you do, if you could pick up the phone and talk to an attorney about any legal question you had, and did not even have to pay extra for the phone call itself? Would you use an attorney more often? I would think so...I know I have. Take for instance a long distance telephone bill I had, and I KNEW I did not make the call. My phone service would not remove the charge. It was only $14, but it was the principle of the situation. I did not owe, so I wasn't going to pay it. Most people would, because it was so small, and you are not going to pay $100+ for an attorney to handle a $14 problem. It just doesn't make financial sense. Well, I called our law firm through our service plan, spoke to an attorney, and they sent a letter out to the phone company, and the charge disappeared. It cost me nothing extra, other than the monthly fee I was paying already.

"Okay, but I'm sure the monthly fee cost more than the $14 you saved, right?", you are thinking to yourself. True, but remember that will? My yearly cost for the membership is less than what it would cost me for one will, never mind the second one for my wife. So in essence, the other services are free, because the service has paid for itself for at least two years, on the will benefits alone.

Ever signed a contract? I guarantee you have. Whether a lease, rental, mortgage, car loan, cell phone contract, or what ever, you've signed one somewhere. What if you could have an attorney review that contract before you sign it, to make sure you are not being taken advantage of? I did, when I bought our car, and the attorney caught a mistake the lender made, which would have cost me about $2000. Well, that just paid for the membership for another 5 or 6 years.

Traffic ticket defense is another great service. Many times an attorney in the court room, can keep the points off your license, and get a reduced fine or fee (if not dismissed completely). That not only saves you money on the front end, but think about the long-term cost of your insurance rates going up for several years, because of points on your license.

I could go on and on about the benefits of having the service, but the post would be too long. I'll just say having the service has saved me thousand's of dollars since I've had it, and it has paid for itself for at least the next 10 years, in what I've saved. Now I do want to make clear, the law is not always on your side, and you may not like what the attorney has to say (this has happened to me once or twice), but I would rather know where I stand, than wonder "what if...?".

Alright, now you are interested, and want to learn more. Who sells them? Well, most of them are available through an employer as an employee benefit. Some you can buy individually. Some of the companies that sell them are AIG, Arag (the number two legal service company in Germany), and Pre-Paid Legal Services, Inc., among others.

My wife and I chose Pre-Paid Legal (PPL), for several reasons. Cost, portability, no rate hikes on existing customers, it is a publicly traded company (NYSE:PPD), it covers our whole family at no additional cost, and what is called a closed panel system. The other companies we looked at gave you a list of attorneys to call. You had to pick the ones you wanted. But what if you were the first person under that plan to call the attorney? Do you think the service would be good? Do you think he would give you a lot of attention, especially at a reduced rate, if you are the only one who has contacted them through that service plan? With a closed panel system, PPL uses one law firm in each state, that handles all initial calls. They may refer you to a local attorney (usually at no additional cost to you) for some things like traffic ticket defense. But they control who you talk to, so they can make sure you are getting great service. Not to mention by paying one law firm a yearly fee to serve their members, the law firm has a huge incentive to give great service. Would you rather have the attorney who is giving a discounted rate, and you are his first client through that particular plan, or would rather have the law firm who is being paid MILLIONS of dollars a year (through group buying power), to handle your issue as best as they can? That is why we chose PPL.

I am sure you ave seen this phrase in a few of my posts : SAVING MONEY is MAKING MONEY. I often tell you ways to cut back on your spending, in order to save your money, so suggesting you look for a service that will add a monthly cost for you, seems out of place, right? I have learned through the years, that sometimes though, you need to spend a little money, to save some money. This service is a great example of doing that. I estimate we have saved almost 10 times more than we have spent, by having this service for the past 6 years. Ten times!! That is huge! And it's worth the peace of mind to know that legal help is just a phone call away.


Ben said...

Although we moved to a province that does not have Pre paid Legal yet we still have our membership.
It has more than paid in full the monthly fees for us already. I just wish they'd set up an office in Saskatchewan.

Steve said...

yeah, sometimes it can be frustrating that the coverage isn't everywhere. My folks waited for a couple years after we told them about the service, for it to finally be made available in their home state. They bought it the first day it was available. Not sure on how it works in Canada though, but I would assume it's like the States, where you have to jump through a bunch of government red tape to get approved to do much. Here's hoping it comes your way again, soon.