Annually, three out of four employees experience at least one legal situation. The financial repercussions of such an unexpected event can be stressful for anyone, making legal insurance plans an invaluable workplace benefit.
From an organizational perspective, legal issues create stressed-out and underperforming employees with higher risks of health problems and absenteeism.
In fact, the ARAG report How Legal & Financial Stress Impacts Employee Wellness reveals that 47% of workers expressed concern with their performance quality because of stress.
Furthermore, the report shows that half of those experiencing legal issues had to take an average of four days off from work to resolve them.
Having a safety net in case of a legal emergency could effectively tackle these drawbacks.
With that in mind, this article explores what legal insurance is and why companies need to include it in their benefits package.
What is а Legal Insurance Plan?
Group legal insurance is a voluntary employee benefit that some employers offer as part of their benefits package. Also referred to as just legal insurance or group legal services insurance, its purpose is to alleviate some of the economic impact and stress associated with legal matters.
As such, it covers expenses like attorney and court fees and other unforeseen expenditures related to legal cases.
The premiums for this type of insurance are often relatively low, with an average of $20 per month. In return, depending on the plan coverage, members can receive the following:
- A vast network of attorneys that will represent them if and when needed
- Consultation on legal issues
- Document reviews and preparation
- Follow-ups on legal matters on their client’s behalf
Legal insurance is available for individuals and as an employee group plan.
The value-for-money ratio is reason enough for employees to opt for this type of insurance. At the same time, companies can use it as an inexpensive company “perk” to improve worker productivity and well-being.
Legal Insurance for Employees
Group insurance plans are a common workplace benefit. Some of the most standard options are group health or life insurance policies. However, legal insurance for employees is equally important in providing the workforce with a safeguard on their finances in case of an unpredicted event.
Although the coverage may vary depending on the employer and insurance provider, some of the most common legal resources range from assistance with traffic violations and other criminal matters to family law, wills, and estate planning.
The insurance is voluntary, and employers offer it as part of their employee benefits package.
Legal Insurance for Individuals
Unlike the first category, individual or personal insurance is obtained directly by the employee or through a family member, regardless of whether the company offers it or not. This is because some plans cover the insured and their spouses and dependents.
In this case, the services an insured will receive depend on the insurance company’s coverage and not so much on the employer, which means this one has a more customizable approach that allows individuals to plan according to their specific needs.
The Benefits of Legal Insurance
Workplace benefits boost employee contentment. According to the SHRM report, 60% of workers rated benefits as a significant contribution to their job satisfaction.
In that manner, the benefits of legal insurance for employees and employers go beyond providing and accessing a network attorney and legal consultations. They expand to other advantages in the workplace, including the following:
Better financial security by covering unexpected legal expenses.
An inexpensive benefit that compliments other benefits, like financial wellness and other forms of insurance.
Financial savings because of plan-covered fees and reduced rates for non-covered services.
Attuned to a diverse workforce and their needs since anyone can benefit from legal support.
Increased job satisfaction and engagement.
Increased employee satisfaction, thus affecting productivity and engagement positively.
Time savings on finding an affordable lawyer.
Reduced absenteeism since it cuts down time off work for employees dealing with a legal problem.
Access to educational and legal tools and resources available through employer-sponsored legal plans.
Potentially increased employee retention and talent acquisition.
Ways to Use Legal Insurance
With just a small monthly fee, insured individuals recieve comprehensive coverage they can use on legal issues like the following:
- Wills and estate planning like trust funds, testaments, etc.
- Changes in a relationship, like marriage and divorce
- Family law matters, including fostering, adoption, or custody battles
- From minor to more severe legal infractions and criminal matters
- Real estate legal assistance like land disputes, buying or selling a property
- Consumer relations and credit protection
- Personal protection like identity theft insurance
- Assistance with contracts and review of routine legal documentation
- Elder law matters, including nursing home agreements, hospital bills, etc.
The coverage depends on the policy. However, the only common exception for all legal insurance plans is that it doesn’t apply to workplace matters.
Legal Insurance Plan Restrictions
Depending on the type of insurance, there can be some restrictions on what employees get. For example, employer-sponsored legal plan coverage depends on what the insurance broker offers and what the employer chooses to get for its workers. In individual plans, the limitations are only related to the insurance company.
Two mutual components of all policies, regardless of the type, are:
- Excluding workplace-related legal insurance
- Offering both in-network services and out-of-network services
Overall, each contract will have some limitations. Thus, it’s vital for the insureds to fully understand what they get out of their insurance policy before they opt in for a plan.
In-Network vs. Out-of-Network Legal Services
Understanding the difference between in-network and out-of-network legal services can help insureds cut down their costs.
Namely, like other insurance plans, the distinction between these two depends on the terms and conditions of the policy.
In-network services refer to insurance providers that are part of the network of legal providers the plan covers and has negotiated price discounts. Thus, the law firm or attorney has a signed agreement with the insurance policy provider to offer their services at a lower or no cost to the insureds.
On the other hand, with out-of-network services, there’s no signed agreement in place, and these providers can charge employees the total price for their services. However, some insurance plans also offer discounted rates for specific out-of-network services.
Legal Insurance Plans
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Legal Insurance Coverage Costs
For employers and enrollees, the most critical aspect of enrolling in such a program is usually the cost.
So, how much is legal insurance, and is it worth it?
Typically, legal insurance plans cost around $20 per month, or $240 annually. The price, however, can be as low as $0.50 to about $1 per day. More expensive plans usually offer better service coverage or discounts for out-of-network legal services.
For comparison, on average, lawyers charge $391 per hour. The price range can go even higher, with a Statista report showing that the highest hourly rate for attorneys in the U.S. for 2022 was $424.
Even a more expensive legal insurance plan doesn’t come closer to what the actual price of legal services can be. In that manner, legal insurance is undoubtedly a worthy investment.
Legal Insurance Plan Alternatives
With legal insurance plans, enrollees pay a premium and, in return, get in-network legal services for free. However, other employer-sponsored legal plans alternatives offer similar benefits, including:
- Employee Assistance Programs (EAPs): Some EAPs offer access to free consultations or legal assistance at a discounted rate as part of the plan
- Document Providers: This option allows employees to create legal documents online for minor and more common legal issues
- Discount Legal Plans: As the name suggests, they offer discounts on the hourly rates of attorney services
Understanding what legal insurance is, how it works, and its potential as a workplace benefit is the first step in providing peace of mind to millions of employees.
Overall, it goes beyond a company perk, and it’s a good and inexpensive investment in creating a healthier, less stressed, and more productive workforce.