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Legal Insurance Keeps Up

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Most employees have at least one legal life event in a typical year

When benefits managers read the news and ask themselves, “How can I help employees deal with this trend?” one answer may be legal insurance.

Legal insurance certainly cannot help employees with every problem that makes the headlines, but whether the issue is immigration, identity theft or the conflict over the fate of Terry Schiavo, legal insurance may be able to provide some relief.

Employers have been offering legal insurance for more than 30 years now, and studies show the need is great.

A 2002 survey by the American Bar Association, Chicago, found that nearly 70% of U.S. households had an issue during a typical year that might have led them to hire a lawyer.

In addition, a recent survey by Harris Interactive Inc., Rochester, N.Y., found that 88% of all employees experienced at least one legal life event in a typical year. To resolve their legal life events, employees took an average of 7 days off of work and spent 9 hours on the job dealing with the issue. For an employee with an annual salary of $50,000, that translates in $225 in lost productivity and $1,400 in vacation time.

The Schiavo case, which centered around a husband who wanted to take his wife off life support and parents who wanted to keep their daughter on life support, illustrates the potential value of legal insurance.

The root of the Schiavo case was Terry Schiavo’s failure to create a clear, valid living will before she slipped into a persistent vegetative state as the result of complications from a potassium imbalance.

A living will spells out an individual’s wishes for end of life care. Creating a living will takes away the guesswork for an individual’s family members and helps family members focus on the loved one’s wishes.

Many state bar associations offer free living will documents on their web sites, and other organizations offer downloadable living will documents for nominal fees.

Although creating a living will can be simple, some employees might prefer to consult with a knowledgeable attorney when drawing up a living will, just as some might prefer to consult with accountants when filing their income tax forms.

Although the general process of creating a living will might be simple, the details can be complicated. Each state has its own requirements for a living will; each individual has different desires and a different living situation, and, finally, just completing a document does not assure that an individual’s end-of-life requests will be met.

Unfortunately, hiring an attorney can be expensive. U.S. attorneys charge an average of $240 per hour, according to a 2004 conducted by Altman Weil Publications Inc., Newtown Square, Pa.

That’s where legal insurance as a voluntary employee benefit can help. Serving as a conduit between employees and local attorneys, legal insurance can be used for in-person or over-the-phone legal consultation on a wide variety of personal legal matters, such as living wills.

At a typical legal insurance plan, more than 1% of the claims may involve the drafting of living wills. Now that the Schiavo case has made the headlines, that percentage might rise.

Of course, legal insurance is a benefit that can do far more than help an employee draw up a living will. No one knows when, or what type of, legal situations might arise. But paying $10 to $20 per month for access to legal consultation is a great way to improve employees’ peace of mind and productivity, by helping employees deal with the events that make news in their own lives.

Jim Kraynik is vice president of business and product development at ARAG North America Inc., Des Moines, Iowa.. He can be reached at [email protected].

The Breakdown


Percentage Of Claims

Wills and estate planning


Consumer protection


Property transfers




Property protection


Source: ARAG North America Inc., Des Moines, Iowa


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