Dave Says: Do I Need Prepaid Legal?

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