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Prepaid Legal Benefits
What are Prepaid Legal Benefit Plans
Pre-paid legal services refers to individual or group employee benefit legal plans in which members pay a monthly fee in exchange for access to a range of legal services on-call. Pre-paid legal plans typically offer certain services for a fixed monthly charge such as legal advice and consultation, review of contracts, having a lawyer write a letter on a client's behalf or the drafting of wills and other legal documents. Legal service plans may also cover legal representation in court and the filing of motions but most plans require a client to pay extra for such services or cover a limited number of hours in court time.
The pre-paid legal service industry has existed in Europe since 1907, but is a recent phenomenon in the United States. While some market services via Independent Associates, most "legal-care" companies offer their services through insurance agents (as part of their portfolio of services), through salaried staff or through independent agents working on commission.
In some states, pre-paid legal service plans are considered to be insurance, and are regulated by the state's insurance commission; in these states an individual must obtain an insurance license from the state before they are able to market memberships.
Pre-Paid Legal Services, Inc.
Pre-Paid Legal Services, Inc., the largest benefit plan provider, develops, underwrites and markets legal service plans through a network of more than 50 independent law firms across the U.S. and Canada. The plans provide for legal service benefits, including unlimited attorney consultation, letter writing, document preparation and review, will preparation, traffic violation defense, automobile-related criminal charges defense and a general trial defense. The Company also markets an identity theft restoration product.
Pre-Paid Legal's cornerstone product is their Expanded Family Plan, which covers preventive legal services, motor vehicle services, trial defense, and IRS audit protection. The exact coverages vary from state to state (or province to province) depending on local laws. In states or provinces where certain services are not offered in the plan, the membership fees are adjusted accordingly.
The company also offers several riders which can be added onto the family plan for an additional fee, including the Legal Shield, which provided 24-hour access to an attorney in the event the member is detained or arrested, the Identity Theft Shield, which provides credit monitoring and identity restoration services, and the Home Based Business Rider, which provides services such as debt collection letters. The Identity Theft Shield can also be purchased as a standalone product.
In addition, the company offers several specialized plans targeted at certain niche markets, such as truck drivers, law enforcement officers, and small business owners. While each type of plan is unique, all of the legal plans offer telephone consultations, and all provide a discount for legal services that fall outside of their respective specified coverage.
The Business Model
Pre-Paid Legal markets their services through a network of Independent Associates, through a multi-level marketing structure. An individual or corporation can join the company by paying a one-time fee of $49 to $249. This fee covers the Associate's initial corporate training, as well as a starter kit of marketing materials. Certain states also require that Associates become licensed insurance producers, which may require an additional fee. The company pays commissions on an advance basis, like many other insurance companies.
While an Associate can move up through the compensation plan solely through volume of production, most are encouraged to recruit other people into their team in order to reach the higher commission levels faster.
When a plan is sold, the Associate making the sale is paid a commission based on his level, and commission overrides are paid to the Associates that are both higher in the structure, and of higher commission level than the selling Associate, in an amount equal to the difference between their respective commission amounts.
The first levels in the compensation plan are attained by meeting a one-time qualification. Once an Associate reaches a new level, they cannot drop back down to a lower level. The first level where this is not true is called Executive Director (ED). To qualify for ED, an associate must have 75 membership sales each month among all the associates in his or her team. An ED can reach higher commission levels if other members of his or her team also qualify for ED. Most Associates who maintain ED qualification for several months are able to live comfortably off their income from the business without any other source of income.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Pre-paid legal services".
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