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Magazine Features
Do I Need Pre-paid Legal?
by Dave Ramsey
Do you think pre-paid legal services are worth purchasing?
Dear Dave,
Do you have an opinion on whether or not pre-paid legal is a product worth purchasing?
Anika
Dear Anika,
I'm not mad about pre-paid legal. But a lot of folks who recommend and advocate it don't like me very much, because I tell people it's a bad idea. Here's why: Pre-paid legal will cost you about $300 a year. If you take $300 a year, and multiply that out over 10 years, you're looking at $3,000. The truth is that the average American consumer doesn't spend $3,000 on legal bills in this amount of time.
Lots of people will tell you that you miss out on tons of opportunities by not having a lawyer ready to jump into things. That's a bunch of garbage! Once in a great while you may need the services of an attorney, but think about this: If the average person spent $3,000 or more over the course of 10 years on legal bills, while pre-paid legal took $3,000 from each of these people, pre-paid legal would go broke, wouldn't it? They'd be handing out more in legal services than they receive in fees!
On average, you'll come out better if you self-insure by having a good emergency fund in place. That way, you'll have the money to pay for legal services should the need arise. And part of the reason you'll have the money in place is because you didn't give it to someone else - like pre-paid legal!
- Dave
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Cynthia in Colorado
That was poor advice concerning the Pre-Paid Legal Services, Inc. legal plans. We have had a membership for almost 9 years and would NEVER be without it. It has saved us literally thousands of dollars. We have six children, all of whom have had a traffic ticket, fender bender, etc. and they are good kids. Every time, we have faxed the ticket into the law firm, they have been able to get the points and fines reduced in 90% of the cases. They don't fix tickets, but their goal is to keep your insurance costs down. We own a business and were sued in a frivolous lawsuit about 4 years ago. We had excellent representation and secured a judgment against the plaintiff with prejudice which means she can never sue us again. That suit lasted over a year and we got more than 25% off the law firm's regular hourly rate - it was more like 50%. Total billable hours came to $31,500 (at the discounted rate) - our membership covered $21,500 of that. The unlimited phone consultation that is available to us is invaluable. We use it all the time. A comprehensive Will is included for both spouses, document review, IRS tax audit help and much more is included for a low monthly fee ranging from $17-26/month. I liken it to medical, life, and auto insurance - a needed benefit to protect assets and provide peace of mind.
Nels in Indianapolis
Prepaid legal companies would not survive if all their clients fell into what is called 'adverse selection' as described above. Business risk and moving violation risk should be covered by the individual performing such actions, not by others who were duped into paying for the downside of another person's risk. Dave is only saying that, for the average person, pre-paid legal is a waste of money. Hopefully, these companies raise the rates of those who take advantage of them. Then again, maybe they shouldn't so that less people have the propensity to sue.
Michelle in California
I agree with Cynthia from Colorado. Though everyone's circumstance is different, overall I agree a pre-paid legal service is a good investment to have.
Jeffrey in Syracuse
I have been a Pre-paid member for several years and one of the many benefits that I enjoy is the fact that they will review and give their legal advise on all legal documents, no just all or any documents that you want them to give a legal opinion on. It could be employment contracts, busi ess contracts, personal contracts or binding agreements etc., etc.. Just send them or FAX them a copy and ask them to review it for any cautions or concerns amd send you their answer or call and talk with you about it. They are great! Jeff