Having legal problems is an eventuality that’s sometimes almost impossible to avoid. At least once in a lifetime, people are involved in a situation that needs to be resolved by a lawyer or by going before a judge. The most common are usually divorces and disputes over child custody and child support. But there are also other scenarios where you may require the help of a legal professional.
Dealing with these situations requires hiring a professional and money to pay for paperwork and attorney’s fees. In some cases, you know that you will face a legal dispute, but you have no idea how much money you will have to invest. To lighten these burdens, legal insurance is born, whose objective is to cover the expenses of such a dispute. But the most important question of this post is: Is Legal insurance worth it?
What is Legal insurance?
Legal insurance, also known as legal services insurance, is designed to finance legal services. This makes the costs of legal disputes more affordable for citizens. Upon closer inspection, however, it does not behave entirely like insurance but rather like a discount plan.
Just as health insurance is functional, legal insurance is indispensable when fees exceed your budget. With legal services insurance, you can pay an affordable monthly premium for everyone; most are around $20 per month. However, it all depends on the plan chosen and the insurer.
With this monthly premium, you will protect your pocket from costly legal disputes. If you think this type of situation will not happen to you, statistics show that three out of four Americans are involved in a legal dispute at least once a year. Under this scenario, taking out this type of insurance makes sense.
How does legal insurance work?
The actual operation of your insurance plan will depend solely on the provider. Depending on the type of policy, you may receive your coverage in direct payments -as medical insurance does-, in a reimbursement -as pet insurance does- or as a discount on legal services. The latter is the norm for almost all legal insurers.
Most legal plans respond to an annual premium ranging from $100 to $300. The final cost will depend on the method chosen, but in most of them, you will find a network of providers, financial benefits, and some limitations.
Is Legal insurance worth it?
All insurance plans help citizens plan their financial lives. This way, they protect their finances and help them prepare for challenging eventualities. In this case, you can plan for unexpected legal problems with legal services insurance.
By paying a low premium, compared to other types of insurance such as health, home, or auto, legal policyholders have access to a nationwide network of lawyers to enjoy the following services:
- Legal advice and consultations
- Document review and preparation
- Case follow-up calls
- Assigning you a lawyer, in case you do not have one
This type of insurance means not only helping for unexpected moments but also those we already anticipate. For example, the purchase of a house, the writing and execution of a will, or the adoption of a child.
Some cases do not begin as legal situations, but along the way, you need special representation; for example, a landlord increases the monthly payment in violation of the contract, a home contractor refuses to make repairs that you have already paid for, or you receive a credit report and need help dealing with a debt that is not yours.
In any case, the answer to the main question of whether or not it’s worth it will depend entirely on your financial means. If you consider yourself a person with great solvency, you may not need financing for small cases. Still, you may face unexpected situations that require a group of specialists for support and legal action. Do you think you can assume this situation, or do you need money to cover your legal expenses?
What does legal insurance coverage look like?
Depending on the terms of your policy, the insurance will cover some of these aspects. Most insurance plans offer coverage for legal consultations, advice, assistance, document preparation, and representation. The matters usually covered are:
- Estate planning
- Will and trust
- Home Purchase
- Contractor disputes related to the home
- Power of attorney
- Tenants’ rights concerns
- Marriage and divorce
- Adoption
- Child custody and child support
- Bankruptcy and receivership
- Refinancing and debt collection
- Traffic tickets
- Financial contracts and legal agreements
- Lawsuits
- Tax advice
- Labor disputes
- Employment contracts
Some legal insurance policies link other types of insurance related to the policyholder, such as home or automobile. In these cases, it covers related legal issues. For example, a legal insurance rider to a homeowner’s auto policy may cover disputes in the purchase contract, not accident damage.
Advantages and disadvantages of taking out legal insurance
To help you make the right decision, we will show you the advantages and disadvantages of this type of insurance. As previously mentioned, whether or not to pay for legal insurance will depend on your needs. If you have it, you may be paying more than the actual insurance coverage, but if you don’t pay for it, you will be unprotected against these scenarios.
Advantages
Some benefits of having insurance are:
- Peace of mind: as well as any insurance, it allows you to plan and have peace of mind regarding these cases. You can access these services when needed, and they have low premiums
- Cost planning: Investing $100 to $300 a year will better help you solve a problem than paying $5,000 immediately in an adverse situation
Disadvantages
Like any situation, this type of insurance has certain disadvantages you should consider:
- Low costs: That also counts as an advantage but has its downside. Paying $20 a month will allow you to cover only minimal procedures such as writing a will or disputing a traffic ticket. The client can spend years paying thousands of dollars on insurance to only benefit from services you can pay for with a few hundred dollars
- Limitations: In most cases, insurers do not assume full coverage – a product of the low cost – but one can benefit from a discount
- Limited attorney network: If you are in a major conflict situation, you may not have access to a qualified attorney but a general one