1. BROKER WORLD MAGAZINE
Prepaid Legal:
From A Novelty To An
Accepted Insurance
JEROME
Marketing Opportunity
R. CORSI
holds a Ph.D. from Harvard
University. He has spent the
past 25 years in the financial
services industry, focusing
largely upon alternative meth-
L ife insurance has never beento
atable to sell. No one wants
pal- sent its members in personal injury
disputes from railroad accidents.
ods of distribution, including talk about death, let alone death bene- Finally, in 1975, the American Bar
bank marketing. He is senior
vice president with US Finan- fits. The average person can be ex- Association dropped its opposition
cial Marketing Group, head-
quartered in Rochester, NY
pected to think about love, family, job and amended its code of professional
where he is the editor of www. and money many times during the ethics, conceding that middle class
theusbroker.com, a website
devoted to agent recruitment
course of the day, but life insurance is groups organizing to purchase legal
and to www.usfinacialmarket certainly not on the top of the daily services were as legitimate as busi-
inggroup.com a web- site foc-
used on retirement financial list. nesses retaining corporate clients.
planning. Life insurance is at best an intangible, Today, over one million middle-
Corsi can be reached at
jrlc@optonline.net. He can also in a market economy where by defini- income households are covered by
be reached by leaving a
message at his New Jersey
tion concepts are more difficult to sell prepaid legal services, and the market
office, 973-989-2393. then commodities you can touch and is expanding rapidly. In a litigious
feel such as houses or cars. Mention at society such as ours, legal structures
a party that you are a life insurance pervade every aspect of our lives, and
agent and your evening is likely to be the average person is coming to real-
spent alone. No wonder industry sta- ize that a lawyer may be useful in
tistics over the past three decades an- situations beyond divorces, criminal
ticipate that even the successful life indictments and will writing. Looked
insurance agent will sell no more than at appropriately, prepaid legal ser-
one life insurance policy per week, 50 vices are a type of benefit that pro-
over the course of a year. vides access to legal advice at dis-
Prepaid legal plans have been around count rates. For the professional cur-
since the early 1900s; in fact, two Su- rently selling life insurance, market-
preme Court cases established their ing prepaid legal services may be a
legitimacy. In 1963, the Supreme door opener that can additionally be a
Court upheld the constitutionality of source of recurring commission reve-
an NAACP legal program that was nue.
pressing aggressively to break down
barriers of racial segregation and dis- How Prepaid Legal Services Work
crimination. The following year the An individual subscribing to a fam-
Supreme Court ruled in favor of the ily prepaid legal plan typically pays a
Brotherhood of Railroad Trainmen, a monthly amount, generally amounting
labor union with a legal services pro- to less on an annual basis than what
gram established originally to repre- would be charged by an attorney for
Reprinted from BROKER WORLD March 2003 www.brokerworldmag.com
Used with permission from Insurance Publications Subscriptions $6/yr. 1-800-762-3387

2. BROKER WORLD MAGAZINE
one or two hours work. Alternatively, Today, many small and medium tant dimension of first-year and re-
the prepaid legal plan may be offered sized companies have joined the newal commissions that may replace
as a workplace benefit, often as an ranks of corporations offering or supplement renewal commissions
elective or voluntary choice. The em- voluntary subscription to prepaid on the life insurance side of the equa-
ployee who chooses to participate in a legal service plans on a payroll tion. Many employers have already hit
prepaid legal program can usually pay deduction basis. As the concept a wall trying to improve employee
via payroll deduction. expands in the marketplace through health benefits in a world of dramati-
Most plans provide basic services such this decade, we can envision that sub- cally increasing health insurance costs.
as the preparation of a will, with per- scribers to prepaid legal plans may Prepaid legal may well add the type of
haps unlimited access to participating jump to a level of approximately five advantage the competitive employer
attorneys for telephone consultations. million participating families, roughly seeks in hiring and retaining talented
Legal representation that requires ex- five percent of the available US. mar- employees.
tensive work is provided at a substan- ket. At this point, the concept will no About 14 states have licensing regula-
tial discount from normal attorney longer be considered novel and the tions for marketing prepaid legal ser-
hourly billing fees. growth of plans in the decade 2010 to vices. As usual, the thicket of slate
The market for pre paid legal services 2020 should increase even more dra- regulations is best navigated with the
is Middle America. Over 95 percent of matically. assistance of a quality provider of the
all lawsuits filled in. the world arc filed As workplace marketing expands into program, the prepaid legal services
in the United States. Yet, surprisingly, this new area, prepaid legal services vendor of choice. Most licensed life
the average American has not been may become as expected an employee insurance agents will be able to qualify
conditioned to think of everyday prob- benefit as major medical insurance or to sell prepaid legal services with little
lems in legal terms. Yes, in a crisis group Life. In the next few years, pre- or no additional licensing effort. The
situation, such as an arrest for DUI or paid legal services may well emerge key is to affiliate with an established
a divorce, the need for legal represen- from being a novelty to becoming an- prepaid legal services program suffi-
tation is reasonably apparent to every- other accepted form of insurance the ciently expert to provide knowledge-
one. Still many more common situa- average American expects. able assistance on appropriate state
tions affecting the average person have regulations.
legal dimensions. Emerging Marketing Opportunity Although this “new” product is over
Consider relatively mundane situa- The insurance agent seeking to ex- 30 years old, most employers, employ-
tions such as an expensive purchase of pand marketing opportunities is well ees and consumers, as well as insur-
what amounts to a defective product advised to consider prepaid legal ser- ance professionals, are just now be-
that may or may not be fully covered vices. Clearly the concept of discussing coming aware of prepaid legal services.
by a warranty, or a contact from a the protection of available legal assis- Now that several major insurance un-
collection agency seeking to settle an tance is more palatable than having to derwriters have acquired or begun
outstanding and overdue credit card bring up issues of mortality in relation affiliating with key players in the pre-
debt. Then, too, many more situations to traditional life insurance. paid legal services world, the landscape
today have legal ramifications, perhaps Even if the insurance marketer’s spe- has changed.
a child is involved in a dispute at cialty is estate planning, prepaid legal Independent life insurance agents and
school or an employee has been de- services just add another dimension: those whose brokerage contracts per-
nied a promotion as a result of a Does the prospect have a will that mit representation of multiple insurers
prejudice at the workplace. meets current needs? Or, on a more are well advised, to consider the op-
Prepaid legal services aim to put the complex level, is there a need for an portunity now, while the market re-
services of an attorney a phone call estate tax plan to be drawn up by an mains relatively open and yet to be
away from reach of the subscribing attorney? Prepaid legal services com- explored.
member. A prepaid legal services card plement the portfolio of the life insur-
that can be carried in a wallet or purse ance specialist by adding credibility and Special thanks to Harland Stoncipher for
lists the member’s number and pro- demonstrating concern for the pros- helpful comments and suggestions in the
vides instructions for calling the appro- pect’s current well-being. drafting of this article.
priate attorney on call. The card can The insurance expert who has mi- The references to the U.S. supreme
serve as a “legal shield,” one readily grated to workplace marketing can add court cases are as follows: NAACP versus
handed to a police officer as notice another dimension to the plan for the Button, 371 U.S. 415 (1963), and Broth-
that the member is invoking the Con- employer. For the successful insurance erhood of Railroad Trainmen versus Vir-
stitutional right to be represented by professional who decides to offer pre- ginia ex. Rel. Virginia State Bar, 377 U.S.
legal counsel. paid legal services, there is the impor- 1 (1964).
Reprinted from BROKER WORLD March 2003 www.brokerworldmag.com
Used with permission from Insurance Publications Subscriptions $6/yr. 1-800-762-3387