Do I Need Prepaid Legal?

Anika wants to know about prepaid legal services. Does Dave recommend them? Dave says why he doesn’t.

QUESTION: Anika wants to know about prepaid legal services. Does Dave recommend them? Dave says why he doesn’t.

ANSWER: I tell people not to buy it. Prepaid legal costs about $300 a year. That’s about $3,000 over ten years. The average American consumer does not spend $3,000 in a ten-year period of time on legal bills. If the average American that was doing business with prepaid legal did—on average—spend more than $3,000 on legal bills during a ten-year period of time, while they took in $3,000, prepaid legal would be broke. They would be paying out more in legal services than they’re receiving in fees.

Instead, I would recommend you have a good emergency fund in place. Should the need to hire legal services arise, you will have the money to pay for it. You self-insure for the need for an attorney. On average, you’ll come out better.