Prepaid legal plans offer policy holders access to legal services at significantly reduced rates in exchange for the payment of a monthly premium. The coverage offered by prepaid legal plans varies according to the company providing the service as well as the extent of coverage chosen by the policy holder. Some plans cover basic legal services, such as uncontested divorce, bankruptcy, and adoption, while others primarily offer coverage in case of protracted litigation. Most plans also offer significant discounts on all different types of legal services as well as limited free consultations with attorneys. In some cases, plans might also offer additional services, such as credit monitoring or identity theft protection.
Also known as legal insurance, prepaid legal plans require policy holders to pay a monthly fee with the promise that the plan can help cover legal matters as they arise. The amount of coverage offered can vary widely by plan. For example, some plans focus on the issue of legal liability. If a policy holder is sued, the plan helps cover the cost of legal representation. Other plans address more mundane legal matters. For example, the plan might provide full coverage for simple, uncontested, everyday legal issues that people often deal with, such as divorce or mortgage closings. In such cases, the policy holder may be responsible for paying court costs, but the plan will cover the lawyer's time and efforts in completing the necessary legal services.
Typically, prepaid legal plans also offer policy holders the opportunity to get legal services that are not covered by the plan at a significant discount through the plan's network of attorneys. In addition, plan participants often have access to a lawyer referral and advice system that allows policy holders to call a toll-free number to be referred to an attorney who can answer basic questions about their case. The plan might also cover a simple action by the attorney, such as writing a letter or making a single phone call on behalf of the policyholder.
Some types of prepaid legal plans offer policy holders self-help legal assistance in the form of downloadable and customizable legal forms available through the plan's website. In addition to these do-it-yourself options, some plans now help policy holders with monitoring their credit or protecting their identity through identity theft plans. These services notify policy holders in cases where the plan's monitoring services detect unusual financial activity and offer personalized assistance to those who have been the victim of credit card or identity theft by acting as an intermediary between the policy holder and credit bureaus.