This monthly update discusses the emerging opportunity for insurance agents to market prepaid legal services. Prepaid legal plans have existed for over 30 years but are now growing in popularity as more employers offer them as a benefit and individuals recognize the value of affordable legal advice. Prepaid legal services function like insurance, with monthly fees providing access to legal counsel. As the concept becomes more mainstream, agents can earn commissions by marketing these plans alongside life insurance. State regulations apply but most agents can qualify with minimal additional licensing. Overall, prepaid legal services are transforming from a novelty into an expected employee benefit similar to health insurance.

1. MONTHLY UPDATE
Prepaid Legal:
JEROME
From A Novelty To An
R. CORSI
holds a Ph.D. from Harvard
University. He has spent the Accepted Insurance
past 25 years in the financial
services industry, focusing
largely upon alternative meth-
ods of distribution, including
Marketing Opportunity
bank marketing. He is senior
vice president with US Finan-
cial Marketing Group, head-
quartered in Rochester, NY,
where he is the editor of www.
L ife insurance has never been palat-
able to sell. No one wants to talk
about death, let alone death benefits.
sent its members in personal injury dis-
putes arising from railroad accidents.
Finally, in 1975, the American Bar
theusbroker.com, a website The average person can be expected to Association dropped its opposition
devoted to agent recruitment, think about love, family, job and money and amended its code of professional
and to www.usfinancial many times during the course of the ethics, conceding that middle class
marketinggroup.com, a web- day, but life insurance is certainly not groups organizing to purchase legal
site focused on retirement fi- on the top of the daily list. services were as legitimate as busi-
nancial planning. Life insurance is at best an intan- nesses retaining corporate clients.
Corsi can be reached at gible, in a market economy where by Today, over one million middle-
jrlc@optonline.net. He can definition concepts are more difficult income households are covered by pre-
also be reached by leaving a to sell than commodities you can touch paid legal services, and the market is
message at his New Jersey of- and feel, such as houses or cars. Men- expanding rapidly. In a litigious soci-
fice, 973-989-2393. tion at a party that you are a life insur- ety such as ours, legal structures per-
ance agent and your evening is likely vade every aspect of our lives, and the
to be spent alone. No wonder industry average person is coming to realize that
statistics over the past three decades a lawyer may be useful in situations
anticipate that even the successful life beyond divorces, criminal indictments
insurance agent will sell no more than and will writing. Looked at appropri-
one life insurance policy per week, 50 ately, prepaid legal services are a type
over the course of a year. of benefit that provides access to legal
Prepaid legal plans have been advice at discount rates. For the pro-
around since the early 1900s; in fact, fessional currently selling life insur-
two Supreme Court cases established ance, marketing prepaid legal services
their legitimacy. In 1963, the Supreme may be a door opener that can addi-
Court upheld the constitutionality of tionally be a source of recurring com-
an NAACP legal program that was mission revenue.
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 Subscriptions $6/yr. 1-800-762-3387
Used with permission from Insurance Publications

2. MONTHLY UPDATE
one or two hours work. Alternatively, to be represented by legal counsel. offer prepaid legal services, there is
the prepaid legal plan may be offered Today, many small and medium the important dimension of first-year
as a workplace benefit, often as an elec- sized companies have joined the and renewal commissions that may re-
tive or voluntary choice. The employee ranks of corporations offering volun- place or supplement renewal commis-
who chooses to participate in a prepaid tary subscription to prepaid legal ser- sions on the life insurance side of the
legal program can usually pay via pay- vice plans on a payroll deduction ba- equation. Many employers have al-
roll deduction. sis. As the concept expands in the mar- ready hit a wall trying to improve em-
Most plans provide basic services ketplace through this decade, we can ployee health benefits in a world of
such as the preparation of a will, with envision that subscribers to prepaid dramatically increasing health insur-
perhaps unlimited access to participat- legal plans may jump to a level of ap- ance costs. Prepaid legal may well add
ing attorneys for telephone consulta- proximately five million participating the type of advantage the competitive
tions. Legal representation that re- families, roughly five percent of the employer seeks in hiring and retaining
quires extensive work is provided at a available U.S. market. At this point, the talented employees.
substantial discount from normal attor- concept will no longer be considered About 14 states have licensing regu-
ney hourly billing fees. novel and the growth of plans in the lations for marketing prepaid legal ser-
The market for prepaid legal services decade 2010 to 2020 should increase vices. As usual, the thicket of state regu-
is Middle America. Over 95 percent of even more dramatically. lations is best navigated with the as-
all lawsuits filled in the world are filed As workplace marketing expands sistance of a quality provider of the
in the United States. Yet, surprisingly, into this new area, prepaid legal ser- program, the prepaid legal services
the average American has not been vices may become as expected an em- vendor of choice. Most licensed life
conditioned to think of everyday prob- ployee benefit as major medical insur- insurance agents will be able to qua-
lems in legal terms. Yes, in a crisis situ- ance or group life. In the next few years, lify to sell prepaid legal services with
ation, such as an arrest for DUI or a prepaid legal services may well emerge little or no additional licensing effort.
divorce, the need for legal representa- from being a novelty to becoming an- The key is to affiliate with an estab-
tion is reasonably apparent to every- other accepted form of insurance the lished prepaid legal services program
one. Still many more common situa- average American expects. sufficiently expert to provide knowl-
tions affecting the average person have edgeable assistance on appropriate
legal dimensions. Emerging Marketing Opportunity state regulations.
Consider relatively mundane situa- The insurance agent seeking to ex- Although this “new” product is
tions such as an expensive purchase of pand marketing opportunities is well over 30 years old, most employers, em-
what amounts to a defective product advised to consider prepaid legal ser- ployees and consumers, as well as
that may or may not be fully covered vices. Clearly the concept of discuss- insurance professionals, are just now
by a warranty, or a contact from a col- ing the protection of available legal as- becoming aware of prepaid legal ser-
lection agency seeking to settle an sistance is more palatable than having vices. Now that several major insur-
outstanding and overdue credit card to bring up issues of mortality in rela- ance underwriters have acquired or
debt. Then, too, many more situations tion to traditional life insurance. begun affiliating with key players in
today have legal ramifications, per- Even if the insurance marketer’s spe- the prepaid legal services world, the
haps a child is involved in a dispute at cialty is estate planning, prepaid legal landscape has changed.
school or an employee has been denied services just add another dimension: Independent life insurance agents
a promotion as a result of a prejudice Does the prospect have a will that and those whose brokerage contracts
at the workplace. meets current needs? Or, on a more permit representation of multiple in-
Prepaid legal services aim to put complex level, is there a need for an surers are well advised to consider
the services of an attorney a phone estate tax plan to be drawn up by an the opportunity now, while the mar-
call away from reach of the subscrib- attorney? Prepaid legal services com- ket remains relatively open and yet
ing member. A prepaid legal services plement the portfolio of the life insur- to be explored. ❏
card that can be carried in a wallet ance specialist by adding credibility
or purse lists the member’s number and demonstrating concern for the Special thanks to Harland Stonecipher for
helpful comments and suggestions in the draft-
and provides instructions for calling prospect’s current well-being.
ing of this article.
the appropriate attorney on call. The insurance expert who has mi- The references to the U.S. Supreme Court
The card can serve as a “legal shield,” grated to workplace marketing can cases are as follows: NAACP versus Button, 371
one readily handed to a police of- add another dimension to the plan for U.S. 415 (1963) and Brotherhood of Railroad
ficer as notice that the member is the employer. For the successful in- Trainmen versus Virginia ex. Rel. Virginia State
invoking the Constitutional right surance professional who decides to Bar, 377 U.S. 1 (1964).
Reprinted from BROKER WORLD March 2003 Subscriptions $6/yr. 1-800-762-3387
Used with permission from Insurance Publications