UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ]  Preliminary Proxy Statement
[ ]  Confidential,  for Use of the  Commission  Only  (as  permitted  by Rule
     14a-6(e) (2))
[X]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to ss. 240.14a-12

                          PRE-PAID LEGAL SERVICES, INC.
                (Name of Registrant as Specified in its Charter)

                                 NOT APPLICABLE
      (Name of Person(s) Filing Proxy Statement, if other than Registrant)

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          _____________________.


     (2)  Aggregate   number  of  securities  to  which   transaction   applies:
          ______________________.

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          pursuant to Exchange Act Rule  0-11(set  forth the amount on which the
          filing  fee  is   calculated   and  state  how  it  was   determined):
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[ ]  Fee paid previously with preliminary materials.

[ ]  Check box if any part of the fee is offset as provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
     number, or the Form or Schedule and the date of its filing.

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     (4)  Date Filed: ___________________________.






                          PRE-PAID LEGAL SERVICES, INC.
                                One Pre-Paid Way
                               Ada, Oklahoma 74820

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO THE HOLDERS OF SHARES OF COMMON STOCK:

     Our Annual Meeting of Shareholders  will be held in the Liberty  Auditorium
at our  corporate  offices  located at One  Pre-Paid  Way in Ada,  Oklahoma,  on
Wednesday, May 17, 2006, at 1:00 p.m., local time, for the following purposes:

     (1)  To elect two members to our Board of Directors;

     (2)  To ratify  the  selection  of Grant  Thornton  LLP as our  independent
          registered public accounting firm;

     (3)  To transact such other  business as may properly be brought before the
          Annual Meeting or any adjournment thereof.


     The Annual Meeting may be recessed from time to time and, at any reconvened
meeting,  action  with  respect to the matters  specified  in this notice may be
taken without further notice to shareholders unless required by the bylaws.

     Shareholders  of record of Common  Stock at the close of  business on March
24,  2006 are  entitled  to notice of, and to vote on all matters at, the Annual
Meeting.  A list of all  shareholders  will be available  for  inspection at the
Annual Meeting and, during normal business hours the ten days prior thereto,  at
our offices, One Pre-Paid Way, Ada, Oklahoma.

                             BY ORDER OF THE BOARD OF DIRECTORS

                             Kathy Pinson, Secretary

Ada, Oklahoma
April 7, 2006

Please vote by telephone or by using the Internet as  instructed on the enclosed
Proxy  Card or  complete,  sign and date the  enclosed  Proxy Card and return it
promptly in the envelope enclosed for that purpose. You may nevertheless vote in
person if you do attend the meeting.





                          PRE-PAID LEGAL SERVICES, INC.

                                 PROXY STATEMENT

                       2006 Annual Meeting of Shareholders


                                TABLE OF CONTENTS

                                Description Page
Questions And Answers About This Proxy Material And Voting
     When and where is the Annual Meeting?
     Why am I receiving these materials?
     Who can vote at the Annual Meeting?
     What am I voting on?
     How do I vote?
     How many votes do I have?
     What if I return a proxy card but do not make specific choices?
     Who is paying for this proxy solicitation?
     What does it mean if I receive more than one proxy card?
     Can I change my vote after submitting my proxy?
     How are votes counted?
     How many votes are needed to approve each proposal?
     What is the quorum requirement?
     How can I find out the results of the voting at the Annual Meeting?
Proposal One - Election of Directors
Proposal Two - Ratification of Selection of Independent Registered Public
  Accounting Firm
Audit Committee Report
Executive Compensation and Other Information
Security Ownership of Certain Beneficial Owners and Management
Certain Relationships and Related Transactions
Compliance with Section 16 Reporting Requirements
Independent Registered Public Accounting Firm
Annual Report to Shareholders
Availability of Annual Report on Form 10-K
Proposals of Shareholders and Nominations
Other Matters







                                 PROXY STATEMENT
                          PRE-PAID LEGAL SERVICES, INC.
                                One Pre-Paid Way
                               Ada, Oklahoma 74820

                       2006 ANNUAL MEETING OF SHAREHOLDERS


           QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING

When and where is the Annual Meeting?
Our 2006 Annual Meeting of Shareholders  ("Annual  Meeting") will be held in the
Liberty  Auditorium at our corporate offices located at One Pre-Paid Way in Ada,
Oklahoma, on Wednesday, May 17, 2006, at 1:00 p.m., local time.

Why am I receiving these materials?
We sent you this proxy  statement and the enclosed  proxy card because our Board
of Directors is  soliciting  your proxy to vote at the Annual  Meeting.  You are
invited to attend the Annual Meeting to vote on the proposals  described in this
proxy  statement.  However,  you do not need to attend the  meeting to vote your
shares.  Instead,  you may simply  complete,  sign and return the enclosed proxy
card, or follow the  instructions  below to submit your proxy over the telephone
or on the Internet.

We intend to mail this proxy statement and  accompanying  proxy card on or about
April 7, 2006 to all  shareholders  of  record  entitled  to vote at the  Annual
Meeting.

Who can vote at the Annual Meeting?
The record date for  determining  shareholders  entitled to notice of the Annual
Meeting and to vote has been  established  as the close of business on March 24,
2006. On that date, we had 15,047,228 shares of Common Stock, par value $.01 per
share, outstanding and eligible to vote, exclusive of treasury stock.

Shareholder of Record: Shares Registered in Your Name
If on March 24, 2006 your shares were registered directly in your name with our
transfer agent, UMB Bank, N.A., then you are a shareholder of record. As a
shareholder of record, you may vote in person at the meeting or vote by proxy.
Whether or not you plan to attend the meeting, we urge you to fill out and
return the enclosed proxy card or vote by proxy over the telephone or on the
Internet as instructed below to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on March 24, 2006 your shares were held,  not in your name,  but rather in an
account at a brokerage firm, bank, dealer, or other similar  organization,  then
you are the  beneficial  owner of shares  held in "street  name" and these proxy
materials  are being  forwarded to you by that  organization.  The  organization
holding your account is considered to be the  shareholder of record for purposes
of voting at the Annual Meeting.  As a beneficial  owner,  you have the right to
direct your broker or other agent on how to vote the shares in your account. You
are also invited to attend the Annual  Meeting.  However,  since you are not the
shareholder  of record,  you may not vote your  shares in person at the  meeting
unless you request and obtain a valid proxy from your broker or other agent.

What am I voting on?
There are two matters scheduled for a vote:

     *    Election of two (2) directors;

     *    Ratification  of  Grant  Thornton  LLP as our  independent  registered
          public accounting firm

How do I vote?
You may either vote "For" all the  nominees to the Board of Directors or you may
"Withhold" your vote for any nominee you specify.  For each of the other matters
to be voted on, you may vote "For" or  "Against"  or abstain  from  voting.  The
procedures for voting are as follows:

Shareholder of Record: Shares Registered in Your Name
If you are a  shareholder  of  record,  you may  vote in  person  at the  Annual
Meeting,  vote by proxy using the  enclosed  proxy card,  vote by proxy over the
telephone,  or vote by proxy on the Internet.  Whether or not you plan to attend
the  meeting,  we urge you to vote by proxy to ensure your vote is counted.  You
may still  attend the  meeting and vote in person if you have  already  voted by
proxy.

     *    To vote in person,  come to the Annual  Meeting and we will give you a
          ballot when you arrive.

     *    To vote  using  the proxy  card,  simply  complete,  sign and date the
          enclosed  proxy card and return it promptly in the envelope  provided.
          If you return your signed proxy card to us before the Annual  Meeting,
          we will vote your shares as you direct.

     *    To vote over the  telephone,  dial  toll-free  1-888-693-8683  using a
          touch-tone  phone and follow the  recorded  instructions.  You will be
          asked to provide  the  company  number  and  control  number  from the
          enclosed  proxy  card.  Your vote must be received by 5:00 p.m. on May
          16, 2006 to be counted.

     *    To vote on the Internet, go to  http://www.cesvote.com  to complete an
          electronic proxy card. You will be asked to provide the company number
          and control  number from the  enclosed  proxy card.  Your vote must be
          received by 5:00 p.m. on May 16, 2006 to be counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial  owner of shares  registered in the name of your broker,
bank,  or other  agent,  you  should  have  received  a proxy  card  and  voting
instructions with these proxy materials from that organization  rather than from
us. Simply complete and mail the proxy card to ensure that your vote is counted.
Alternatively,  you may vote by telephone or over the Internet as  instructed by
your broker or bank. To vote in person at the Annual Meeting,  you must obtain a
valid proxy from your broker, bank, or other agent. Follow the instructions from
your broker or bank included with these proxy materials,  or contact your broker
or bank to request a proxy form.


 -----------------------------------------------------------------------------
 |We provide  Internet proxy voting to allow you to vote your shares on-line,|
 |with procedures  designed to  ensure  the  authenticity  and correctness of|
 |your proxy vote instructions.  However,  please be aware that you must bear|
 |any costs associated with your Internet access,  such as usage charges from|
 |Internet access providers and telephone companies.                         |
 -----------------------------------------------------------------------------

How many votes do I have?
On each  matter  to be voted  upon,  you have one vote for each  share of common
stock you own as of March 24, 2006.

What if I return a proxy card but do not make specific choices?
If you  return  a signed  and  dated  proxy  card  without  marking  any  voting
selections,  your shares will be voted "For" the  election of both  nominees for
director,  and "For" the  ratification  of Grant Thornton LLP as our independent
registered public accounting firm. If any other matter is properly  presented at
the meeting,  your proxy (one of the individuals  named on your proxy card) will
vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?
We will pay for the entire  cost of  soliciting  proxies.  In  addition to these
mailed proxy materials,  our directors and employees may also solicit proxies in
person,  by  telephone,  or by  other  means  of  communication.  Directors  and
employees will not be paid any additional  compensation for soliciting  proxies.
We may also reimburse  brokerage  firms,  banks and other agents for the cost of
forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are registered in more than
one name or are  registered in different  accounts.  Please  complete,  sign and
return each proxy card to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote at the meeting.
If you are the record  holder of your  shares,  you may revoke your proxy in any
one of three ways:

     *    You may  submit  another  properly  completed  proxy card with a later
          date;

     *    You may send a written  notice  that you are  revoking  your  proxy to
          PRE-PAID LEGAL SERVICES,  INC., One Pre-Paid Way, Ada, Oklahoma 74820,
          Attention: Kathy Pinson, Secretary.

     *    You may attend the Annual Meeting and vote in person. Simply attending
          the meeting will not, by itself, revoke your proxy.

If your shares are held by your broker or bank as a nominee or agent, you should
follow the instructions provided by your broker or bank.

How are votes counted?
Votes will be counted by the  inspector of election  appointed  for the meeting,
who will  separately  count "For" and  "Withhold" for election of directors and,
with respect to proposals other than the election of directors, "Against" votes,
abstentions and broker  non-votes.  Abstentions will be counted towards the vote
total for each  proposal,  and will have the same  effect  as  "Against"  votes.
Broker  non-votes have no effect and will not be counted  towards the vote total
for any proposal.

If your  shares  are held by your  broker as your  nominee  (that is, in "street
name"),  you will need to obtain a proxy  form from the  institution  that holds
your shares and follow the  instructions  included on that form regarding how to
instruct  your broker to vote your shares.  If you do not give  instructions  to
your broker,  your broker can vote your shares with  respect to  "discretionary"
items, but not with respect to  "non-discretionary"  items.  Discretionary items
are proposals  considered routine under the rules of the New York Stock Exchange
("NYSE") on which your broker may vote shares held in street name in the absence
of your voting  instructions.  On  non-discretionary  items for which you do not
give your broker instructions, the shares will be treated as broker non-votes.

Shares represented by proxies which are marked "withhold authority" with respect
to the election of any one or more  nominees  for election as directors  will be
counted for the purpose of determining the number of shares represented by proxy
at the  meeting.  Because  directors  are elected by a  plurality  rather than a
majority of the shares  present in person or  represented by proxy at the Annual
Meeting,  proxies marked  "withhold  authority"  with respect to any one or more
nominee will not affect the outcome of the nominee's election unless the nominee
receives no  affirmative  votes or unless other  candidates  are  nominated  for
election as directors.

Shares  represented  by limited  proxies will be treated as  represented  at the
meeting only as to such matter or matters for which  authority is granted in the
limited  proxy.  Shares  represented  by proxies  returned by brokers  where the
brokers'  discretionary  authority  is limited by stock  exchange  rules will be
treated as  represented  at the Annual Meeting only as to such matter or matters
voted on in the proxies.

How many votes are needed to approve each proposal?
Directors  will be elected by a plurality of the votes of the shares  present in
person or represented by proxy at the Annual Meeting.

For the ratification of Grant Thornton LLP as our independent  registered public
accounting  firm,  Proposal No. 2 must receive a "For" vote from the majority of
shares  present  and  entitled  to vote  either in  person  or by proxy.  If you
"Abstain" from voting, it will have the same effect as an "Against" vote. Broker
non-votes will have no effect.

All other matters  properly brought before the Annual Meeting will be decided by
a majority of the votes cast on the matter, unless otherwise required by law.

What is the quorum requirement?
A quorum of shareholders is necessary to hold a valid meeting.  A quorum will be
present if at least a majority  of the  outstanding  shares are  represented  by
shareholders  present at the meeting or by proxy. On the record date, there were
15,047,228  outstanding  and  entitled  to vote.  Therefore,  7,523,615  must be
represented by shareholders present at the meeting or by proxy to have a quorum.

Your shares will be counted  towards the quorum only if you submit a valid proxy
(or one is submitted on your behalf by your broker, bank or other nominee) or if
you vote in person at the  meeting.  Abstentions  and broker  non-votes  will be
counted towards the quorum requirement. If there is no quorum, a majority of the
votes present at the meeting may adjourn the meeting to another date.

How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting
results will be published  in our  quarterly  report on Form 10-Q for the second
quarter of 2006.


                                  PROPOSAL ONE

                              ELECTION OF DIRECTORS

     Our Board of  Directors  currently  consists  of six members and is divided
into three classes equal in size,  with the term of office of one class expiring
each year. Based on the recommendation of the Nominating Committee, the Board of
Directors  has  nominated  and  proposes  that John W. Hail and Thomas W. Smith,
whose terms as directors  expire as of the Annual  Meeting of  Shareholders  for
2006, be re-elected for three-year terms as directors.

     The election of a director  requires the affirmative vote of a plurality of
the shares of Common Stock  voting in person or by proxy at the Annual  Meeting.
All proxies  received by our Board of Directors will be voted, in the absence of
instructions to the contrary,  FOR the re-election of John W. Hail and Thomas W.
Smith to the Board of Directors.

     Should the  nominees  for  election to the Board of  Directors be unable to
serve for any reason, the Board of Directors may, unless the Board by resolution
provides for a lesser  number of  directors,  designate  substitute  nominees in
which  event all proxies  received  without  instructions  will be voted for the
election of such  substitute  nominees.  However,  to the best  knowledge of our
Board of Directors, the named nominees will serve if elected.



         The following is certain information about each of our directors:
                                                                                     Existing
                Name                          Age            Director Since        Term Expires
-----------------------------              --------          --------------        ------------
                                                                              
John W. Hail                                  75                  1998                 2006
Thomas W. Smith                               77                  2004                 2006
Peter K. Grunebaum                            71                  1980                 2007
Orland G. Aldridge                            67                  2004                 2007
Harland C. Stonecipher                        67                  1976                 2008
Martin H. Belsky                              61                  1998                 2008


John W. Hail
     John  W.  Hail  is the  founder  of AMS  Health  Sciences,  Inc.  (formerly
Advantage Marketing Systems, Inc.) ("AMS") and served as Chief Executive Officer
and Chairman of the Board of  Directors of AMS since its  inception in June 1988
until February 12, 2006. AMS sells more than 60 natural nutritional supplements,
weight  management  products,  and  natural  skincare  products.  From July 1986
through May 1988, Mr. Hail served as our Executive Vice President,  Director and
Agency  Director  and also served as Chairman of the Board of  Directors  of TVC
Marketing, Inc., which was our exclusive marketing agent from April 1984 through
September 1985. Mr. Hail also serves as a director of InPlay Technologies,  Inc.
(NASDAQ: NPLA) (formerly Duraswitch Industries, Inc.)

Thomas W. Smith
     Mr. Smith is our largest outside shareholder and is the managing partner of
Prescott  Investors,  Inc, a private  investment  firm he  founded  in 1973.  He
currently serves as a director of SEI Investments Company (NASDAQ-NMS: SEIC).

Peter K. Grunebaum
     Mr.  Grunebaum,  currently an independent  investment  banker and corporate
consultant,  was the Managing Director of Fortrend International,  an investment
firm headquartered in New York, New York, a position he held from 1989 until the
end of 2003.  Mr.  Grunebaum  also serves as a director of StoneMor  GP, LLC the
general partner of StoneMor Partners LP (NASDAQ: STON).

Orland G. Aldridge
     Mr.  Aldridge  retired  as a  professor  from  Northeastern  Oklahoma A & M
College in Miami,  Oklahoma in 2002 where he had been an  instructor  since 1999
and has been and  remains an  independent  insurance  agent.  He has served as a
director of our  wholly-owned  subsidiary,  Pre-Paid Legal Casualty,  Inc. since
1991.

Harland C. Stonecipher
     Mr.  Stonecipher  has been the Chairman of our Board of Directors since its
organization in 1976 and served as Chief Executive  Officer until March 1996 and
since  February 1997.  Mr.  Stonecipher  also served as our President at various
times through January 1995 and since December 2002. Mr.  Stonecipher also serves
as an executive  officer of several of our subsidiaries and served as a director
of AMS Health Sciences, Inc. until December 5, 2005.

Martin H. Belsky
     Mr. Belsky,  currently  Professor of Law at the University of Tulsa College
of Law, teaches courses in constitutional  law, ethics,  international  law, and
oceans  policy.  Previously,  Mr. Belsky was Dean and Professor of Law at Albany
Law School from 1986 to 1995 and Dean of the  University of Tulsa College of Law
from 1995 to 2004.


Board Meetings and Committees

     The  Board of  Directors  held  four  meetings  during  2005  and  acted by
unanimous  consent  ten  times.  During  such year all  directors  listed  above
attended at least 75% of the  meetings of the full Board and the  committees  on
which they served.

     The  Board  of  Directors  has  established  an Audit  Committee  currently
consisting  of Messrs.  Aldridge,  Belsky  and  Grunebaum.  The Audit  Committee
selects,  and oversees our relationship with, our independent  registered public
accounting firm and reviews with the independent  registered  public  accounting
firm the scope and results of the annual audit. The Audit Committee also reviews
financial  statements and reports  including  proxy  statements,  Forms 10-K and
Forms 10-Q, reviews all significant financial reporting issues and practices and
monitors  internal  control  policies.  The  Audit  Committee  also  establishes
procedures  for receipt,  retention and  treatment of complaints  received by us
regarding   accounting,   internal   accounting  control  or  auditing  matters,
recommends  and  reviews  our code of ethics and  oversees  our  internal  audit
function.  The Board of Directors has determined that each of the members of the
Audit  Committee  meets  the  independence   standards  of  the  NYSE  corporate
governance  rules and  applicable  Securities  and Exchange  Commission  ("SEC")
rules.  The Audit  Committee  held  eight  meetings  during  2005.  The Board of
Directors has determined that none of the members of the Audit Committee qualify
as a "financial  expert" as defined by the rules of the SEC, because none of the
members meet the requisite qualifications for such designation.

     Additionally, the Board of Directors has established a nominating committee
and a compensation  committee.  The nominating  committee  currently consists of
Messrs.  Belsky and Smith and is  responsible  for  assisting  the full Board of
Directors in  selecting  individuals  for service on the Board of Directors  and
evaluating their performance.  The compensation  committee currently consists of
Messrs. Belsky and Smith and is responsible for establishing the compensation of
our chief  executive  officer and assisting in  evaluation  of our  compensation
policies to assure our  executive  officers  are  compensated  effectively  in a
manner  consistent with our overall  objectives.  The compensation  committee is
also responsible for communicating  our compensation  policies and the reasoning
behind such policies to shareholders. The Board of Directors has determined that
the members of both of these  committees meet the  independence  requirements of
the corporate  governance  rules of the NYSE.  Members of these  committees  are
elected by the Board of Directors  annually for one-year  terms,  or until their
successors  shall be duly elected and  qualified.  During 2005,  the  nominating
committee  met  once and the  compensation  committee  met  twice  and  acted by
unanimous consent four times.

Corporate Governance Guidelines and Communications with the Board

     We adopted Corporate  Governance  Guidelines and a Code of Business Conduct
and Ethics in accordance with the rules of the NYSE in January 2004. The Code of
Business  Conduct  and Ethics is  applicable  to all  employees  and  directors,
including  our  principal  executive,  financial  and  accounting  officers.  In
addition,  each of the  committees  of the board  has a  charter  which has been
approved by the Board. Copies of the Corporate  Governance  Guidelines,  Code of
Business Conduct and Ethics and committee charters are available at our website,
www.prepaidlegal.com.  In addition,  copies of these  documents are available to
any  shareholder  who requests  them from our  Secretary.  We intend to disclose
amendments  to, or waivers  from,  our Code of  Business  Conduct  and Ethics by
posting to our website.

     Our  Corporate  Governance  Guidelines  requires  that  the  non-management
directors meet in executive  session  immediately  following each meeting of the
Board.  The Guidelines  provide that the Chairman of the  Nominating  Committee,
currently Mr. Belsky, will preside over these meetings.

     The Board has  adopted  the  independence  criteria  of the NYSE  corporate
governance  rules to determine  the  independence  of its  directors.  The Board
determined that Messrs. Aldridge,  Belsky, Grunebaum and Smith, who constitute a
majority of the Board, are independent under these criteria.

     Our Corporate Governance Guidelines provide that any person,  including any
shareholder,  desiring to  communicate  with, or make any concerns  known to us,
directors  generally,  non-management  directors or an individual director only,
may do so by submitting them in writing to our Quality Assurance Supervisor, One
Pre-Paid Way,  Ada,  Oklahoma  74820,  with  information  to identify the person
submitting the communication or concern,  including the name, address, telephone
number  and  an  e-mail  address  (if  applicable),  together  with  information
indicating  the  relationship  of  such  person  to us.  Our  Quality  Assurance
Supervisor is responsible for maintaining a record of any such communications or
concerns and  submitting  them to the  appropriate  addressee(s)  for  potential
action or response.  We will establish the authenticity of any  communication or
concern before forwarding. Under the Corporate Governance Guidelines, we are not
obligated to investigate or forward any anonymous  submissions  from persons who
are not our employees.

     We do not have a specific  policy  regarding  board member's  attendance at
annual  meetings of  shareholders,  although,  as a general rule,  all directors
usually  attend such meeting.  At the 2005 annual meeting of  shareholders,  all
directors attended the meeting except John W. Hail.


Compensation of Directors

     Directors who are also our employees receive no additional compensation for
their services as directors.  Effective January 1, 2005,  non-employee directors
receive $7,500 per quarter and $1,000 per board and committee  meeting attended.
The chairs of the compensation and nominating  committees  receive an additional
$1,500 per meeting and the chair of the audit  committee  receives an additional
$2,500 per  meeting.  Thomas W. Smith has  waived  the  receipt of any  director
compensation in exchange for reimbursement of travel expenses.

     The Board of  Directors  recommends  that the  shareholders  vote "FOR" the
re-election of John W. Hail and Thomas W. Smith to the Board of Directors.





                                  PROPOSAL TWO

   RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     The  Audit  Committee  has  directed  us to  submit  the  selection  of our
independent   registered   public   accounting  firm  for  ratification  by  the
shareholders  at the Annual  Meeting.  Neither  our  bylaws nor other  governing
documents  or law require  shareholder  ratification  of the  selection of Grant
Thornton LLP ("Grant Thornton") as our independent  registered public accounting
firm. However, the Audit Committee is submitting the selection of Grant Thornton
to the shareholders for ratification as a matter of good corporate practice.  If
the  shareholders  fail to  ratify  the  selection,  the  Audit  Committee  will
reconsider  whether  or not to  retain  that  firm.  Even  if the  selection  is
ratified,  the Audit Committee may in its discretion direct the appointment of a
different  independent  registered public accounting firm at any time during the
year if it determines  that such a change would be in our best interest and that
of our shareholders.

     The Board of  Directors  recommends  that the  shareholders  vote "FOR" the
ratification of Grant Thornton as our independent  registered  public accounting
firm for the year ending December 31, 2006.

                             AUDIT COMMITTEE REPORT

In  accordance  with its  written  charter  adopted  by the  Board of  Directors
("Board"),  the Audit Committee of the Board ("Committee")  assists the Board in
fulfilling its  responsibility for oversight of the quality and integrity of our
accounting,  auditing and financial reporting practices. During fiscal 2005, the
Committee met eight times,  and the Committee  chair, as  representative  of the
Committee,  discussed  the  interim  financial  information  contained  in  each
quarterly earnings  announcement with the CFO and independent  auditors prior to
public release.

In discharging its oversight  responsibility as to the audit process,  the Audit
Committee  obtained from the  independent  auditors a formal  written  statement
describing all relationships  between the auditors and us that might bear on the
auditors' independence consistent with Independence Standards Board Standard No.
1, "Independence Discussions with Audit Committees," discussed with the auditors
any  relationships  that may  impact  their  objectivity  and  independence  and
satisfied itself as to the auditors' independence.  The Committee also discussed
with  management  and the  independent  auditors the quality and adequacy of our
internal controls.  The Committee  reviewed with the independent  auditors their
audit plans, audit scope, and identification of audit risks.

The  Committee  discussed  and  reviewed  with  the  independent   auditors  all
communications  required by generally  accepted  auditing  standards,  including
those  described  in  Statement  on  Auditing  Standards  No.  61,  as  amended,
"Communication  with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent  auditors'  examination of
the financial statements.

The Committee reviewed and discussed our audited financial  statements as of and
for the fiscal year ended December 31, 2005, with management and the independent
auditors. Management has the responsibility for the preparation of our financial
statements  and  the  independent  auditors  have  the  responsibility  for  the
examination of those statements.

Based on the  above-mentioned  review and  discussions  with  management and the
independent  auditors,  the Committee  recommended to the Board that our audited
financial  statements  be  included  in its  Annual  Report on Form 10-K for the
fiscal year ended December 31, 2005, for filing with the Securities and Exchange
Commission.  The Committee  intends to approve  reappointment of the independent
auditors for 2006.




                                                                       
       /s/ Peter K. Grunebaum                 /s/ Martin H. Belsky                 /s/ Orland G. Aldridge
------------------------------------  -------------------------------------- -------------------------------------
         Peter K. Grunebaum                   Martin H. Belsky                  Orland G. Aldridge
          Committee Member                   Committee Member                   Committee Chairman





Audit and Other Fees

     Grant Thornton served as our independent  registered public accounting firm
during 2005 and 2004.  The aggregate  fees billed by Grant Thornton for 2005 and
2004 for various services are set forth below:



                                                                    2005          2004
                                                                    ----          ----
                                                                         
Audit Fees..................................................     $  528,584    $  406,200
Audit Related Fees..........................................         18,500        26,750
Tax Fees....................................................              -         3,300
All Other Fees..............................................              -             -


     Fees for audit services include fees associated with the annual audit of us
and our  subsidiaries  (including  audit  fees  related  to  Section  404 of the
Sarbanes-Oxley  Act),  the  review  of our  quarterly  reports  on Form 10-Q and
required  statutory  audits.  Audit-related  fees principally  include audits in
connection  with our  employee  benefit  plans,  due  diligence  and  accounting
consultations.  Tax fees  include tax  compliance,  tax advice and tax  planning
related to Federal, state and international tax matters.

     The Audit  Committee  has  considered  whether the  provision  of non-audit
services by Grant Thornton is compatible with maintaining  auditor  independence
and  adopted  in 2003 a policy  that  requires  pre-approval  of all  audit  and
non-audit  services.  Such policy requires the Committee to approve services and
fees in advance and requires documentation regarding the specific services to be
performed.  All 2005 audit and non-audit  services fees were approved in advance
in accordance with the Committee's policies.


                  EXECUTIVE COMPENSATION AND OTHER INFORMATION

Executive Officers
     Our current executive officers are named below:



                     Name                   Age                                Position
        ----------------------            ------     -----------------------------------------------------------
                                         
        Harland C. Stonecipher              67       Chairman of the Board of Directors, Chief Executive Officer
                                                         and President
        Randy Harp                          50       Chief Operating Officer
        Kathleen S. Pinson                  53       Vice President of Regulatory Compliance and Secretary
        Steve Williamson                    45       Chief Financial Officer



     For description of the business background and other information concerning
Mr. Stonecipher, see "Election of Directors" above. All executive officers serve
at the discretion of the Board, subject to, in the case of Mr. Stonecipher,  the
terms of his employment agreement described below.

Randy Harp
     Mr. Harp was named Chief Financial Officer in March 1990 and served in that
capacity  until May 2000 and has served as Chief  Operating  Officer since March
1996.  Mr. Harp served on the Board of Directors  from March 1990 until May 2004
when he resigned  from the Board of Directors as part of a corporate  governance
initiative  required  by the  rules  of the  NYSE to have  independent,  outside
directors  comprise  the majority of the Board.  Mr. Harp is a Certified  Public
Accountant.

Kathleen S. Pinson
     Ms.  Pinson  was  named  our  Controller  in May  1989  and has been a Vice
President of ours since June 1982.  Ms.  Pinson served on the Board of Directors
from April 1990 until August 2002 when she resigned  from the Board of Directors
together with three other directors as part of a corporate governance initiative
to have outside  directors  comprise the majority of the Board.  Ms.  Pinson has
been  employed  by us since  1979 and  currently  serves  as Vice  President  of
Regulatory   Compliance  and  Secretary.   Ms.  Pinson  is  a  Certified  Public
Accountant.

Steve Williamson
     Mr.  Williamson  was named our Chief  Financial  Officer in May 2000.  From
April 1997 until his employment with us in March 2000, Mr.  Williamson served as
the Chief  Financial  Officer of  Peripheral  Enhancements,  Inc., an electronic
memory assembly company.  Prior to April 1997, Mr. Williamson served as Director
in Charge of Banking Practice for Horne & Company, a public accounting firm. Mr.
Williamson is a Certified Public Accountant.

Significant Employee - Wilburn L. Smith
     Wilburn  Smith has been active in our  marketing  division  since 1980.  He
served as one of our  directors  from March 1993 to October  1995 and from April
1997 to December 2001,  during which time he also served as our  President.  Mr.
Smith currently serves as our National Marketing Director.

Executive Compensation

     The  following  table sets forth the  compensation  paid by us for services
rendered  during the years ended  December 31, 2005,  2004 and 2003 to the chief
executive  officer  and to each other  person  serving  as one of our  executive
officers as of December 31, 2005 whose  compensation  exceeded  $100,000  during
2005. Such individuals are referred to herein as the "named executive officers."



                                         Summary Compensation Table
                                                                          Long Term
                                            Annual Compensation(1)      Compensation
                                            ----------------------      ------------
                                                                         Securities
                                                                         Underlying          All Other
  Name and Principal Position      Year     Salary       Bonus (2)         Options        Compensation (3)
-------------------------------  --------   --------     ----------     ------------      ----------------
                                                                                  
Harland C. Stonecipher.........    2005     $157,755     $1,905,046           -               $11,664
   Chairman of the Board,          2004      160,789      2,057,049           -                11,747
   Chief Executive Officer         2003      157,755      1,984,918           -                12,490
   and President

   Randy Harp..................    2005      229,474         89,337           -                 5,417
   Chief Operating Officer         2004      225,000         45,356           -                 5,233
                                   2003      229,327         11,835           -                 5,200

Kathleen S. Pinson.............    2005      132,838         49,350           -                 5,467
   VP of Regulatory Compliance     2004      131,010         27,704           -                 5,281
   and Secretary                   2003      139,422          6,575           -                 5,200

Steve Williamson...............    2005      129,515         47,376           -                 5,948
   Chief Financial Officer         2004      124,615         24,237           -                 5,746
                                   2003      126,923          6,312           -                 3,640

----------------
(1)  Annual compensation amounts include amounts deferred at the election of the
     named individuals  pursuant to a non-qualified  deferred  compensation plan
     which we adopted in 2002.

(2)  Bonus to Mr.  Stonecipher  consists of override  commissions  earned by Mr.
     Stonecipher  pursuant  to  an  override  commission  agreement  with  us of
     $240,000  during  each of 2005,  2004 and 2003,  and  override  commissions
     earned by Mr. Stonecipher with respect to commissions earned by PPL Agency,
     Inc.,  an  affiliated  insurance  agency,  of $56,939,  $55,479 and $57,422
     during 2005, 2004 and 2003, respectively. Mr. Stonecipher also has received
     one-half of one percent of  collected  Membership  fees subject to (in 2004
     and 2005) certain levels of Membership fees being achieved.  The 2005, 2004
     and 2003 bonus  amounts  include  $1,608,107,  $1,761,570  and  $1,687,496,
     respectively,  of Membership  fee bonus.  See "Executive  Compensation  and
     Other  Information-Employment  Contracts and  Termination of Employment and
     Change-in-Control  Arrangements"  and  "Certain  Relationships  and Related
     Transactions."

     Bonuses to Messrs.  Harp and Williamson and Ms. Pinson consisted of bonuses
     based upon growth in our Membership base.

(3)  All Other  Compensation  of Mr.  Stonecipher  includes  $2,406,  $2,804 and
     $3,130 for the years  2005,  2004 and 2003,  respectively,  relating to the
     time  value of  premiums  paid  pursuant  to a certain  split  dollar  life
     insurance  agreement  that  provides for such premiums to be refunded to us
     upon Mr. Stonecipher's  death, and also includes $9,258,  $8,943 and $9,360
     for the  years  2005,  2004  and  2003  respectively,  representing  vested
     contributions  by us to the Employee  Stock  Ownership  and Thrift Plan and
     Trust (the "ESOP").

     All Other  Compensation  of  Messrs.  Harp and  Williamson  and Ms.  Pinson
     consists of vested contributions by us to the ESOP.

Stock Options

     There have been no grants of stock  options  under our Stock Option Plan to
any of the named  executive  officers since May 2002. The following  table shows
information  about options  exercised during the year and outstanding at the end
of the year.







                 Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

                                                            Number of Securities                 Value of
                                                           Underlying Unexercised         Unexercised In-the-Money
                                                                 Options at                     Options at
                                Shares                        December 31, 2005            December 31, 2005 (1)
                              Acquired      Value        ----------------------------    ----------------------------
           Name              on Exercise   Realized       Exercisable   Unexercisable    Exercisable   Unexercisable
---------------------------  -----------  ----------     ----------------------------    ----------------------------
                                                                                        
Harland C. Stonecipher         100,000    $  299,750       200,000              -      $ 3,576,000     $        -
Randy Harp                      50,000       149,875       130,000              -        2,358,300              -
Kathleen S. Pinson               5,000        14,988        10,000              -          178,800              -
Steve Williamson                10,000        66,422        20,000              -          368,900              -

----------------------------
(1)  Value  of  unexercised   in-the-money  options  at  December  31,  2005  is
     calculated  based on the market  price per share of Common  Stock of $38.21
     per share on December 31, 2005 less the option exercise price.

Employment  Contracts  and  Termination  of  Employment  and   Change-in-Control
Arrangements

     We have an employment  agreement  with Mr.  Stonecipher  that  commenced in
January 1993 which was  scheduled  to expire on June 30,  2003,  but it has been
automatically  extended to June 30, 2006 and will be automatically  extended for
successive  one-year periods unless either party elects to terminate at least 30
days prior to the expiration date. Under the terms of the employment  agreement,
Mr.  Stonecipher  is to  receive  compensation  as  determined  by the  Board of
Directors but not less than $157,755 per year. In addition to his annual salary,
Mr. Stonecipher also is entitled to receive a supplemental retirement benefit in
the amount of $26,000 per year  payable on the first day of the month  following
his termination of employment and annually  thereafter  until the earlier of his
death or the date upon which ten such payments have been made.  Mr.  Stonecipher
must meet  certain  minimal  conditions  subsequent  to the  termination  of his
employment in order to receive such payments.  Our  obligation for  supplemental
retirement  benefits  pursuant  to the  employment  agreement  is subject to the
continuation of a certain split dollar life insurance  agreement  between us and
Shirley A. Stonecipher, Mr. Stonecipher's wife, described below. If we terminate
the employment  agreement for any reason (other than Mr. Stonecipher's death) or
Mr. Stonecipher  terminates the agreement for certain specified events including
a change of control of us (as defined in the agreement),  we are required to pay
Mr.  Stonecipher  a lump sum  payment  equal to the  present  value  (using a 3%
discount rate) of the remaining  salary and retirement  benefits  throughout the
term of the agreement.

     Pursuant to a separate  agreement with us, Mr. Stonecipher is also entitled
to an override  commission,  payable  monthly,  in an amount  equal to $.025 per
active Membership as compensation for his efforts in assisting in our growth and
development  of new  production.  The agreement  provides that the amount of the
commissions  shall in no event  exceed  $20,000  per month.  The payment of such
commissions to Mr. Stonecipher continues during his lifetime and after his death
to his designated  beneficiaries  and their successors.  The agreement  requires
that  Mr.  Stonecipher  devote  reasonable  efforts  to  the  generation  of new
Membership  sales  for us.  The  amounts  paid  to Mr.  Stonecipher  under  this
agreement  during the fiscal year ended  December 31, 2005 are  reflected in the
summary  compensation  table set forth above.  Mr.  Stonecipher  also receives a
portion of the  annualized  commission  revenue of PPL Agency,  Inc.,  which was
owned by Mr.  Stonecipher  as a nominee  for us prior to January  1,  2006.  See
"Certain  Relationships  and Related  Transactions."  Such  amounts  paid to Mr.
Stonecipher  are also  reflected  in the  summary  compensation  table set forth
above.

     Since August 2002, Mr.  Stonecipher  has received a bonus equal to one-half
of one percent (.5%) of Membership fees collected. For 2004 and 2005, payment of
this 0.5%  bonus was  conditioned  on our  meeting  certain  Membership  revenue
thresholds. During these periods, Mr. Stonecipher received a monthly bonus equal
to 0.25% of monthly  Membership fees so long as the month's Membership fees were
at least 85% of the  Membership  fees for the same month of the prior year and a
quarterly bonus equal to 0.25% of the quarter's  Membership fees, so long as the
quarter's  Membership  fees  were  greater  than  the  Membership  fees  for the
comparable quarter of the prior year. Such amounts earned by Mr. Stonecipher are
reflected in the summary compensation table set forth above.  Beginning in 2005,
these  Membership fee bonuses were reduced by $500,000 based in part on the fact
that we now own an aircraft previously owned by Mr. Stonecipher.

     In July 1984, we entered into a life insurance  arrangement with Shirley A.
Stonecipher, Mr. Stonecipher's wife, whereby we agreed to pay premiums on a life
insurance  policy  covering  Mr.  Stonecipher.  The face amount of the policy is
$600,000 and Mrs. Stonecipher is the owner and beneficiary. Mrs. Stonecipher has
an agreement with us whereby upon Mr.  Stonecipher's  death, the proceeds of the
policy will be paid to us in an amount sufficient to reimburse  premiums paid to
date  by us and  any  supplemental  retirement  payments  made  pursuant  to his
employment contract. This agreement is secured by a collateral assignment of the
policy proceeds.

     In November 2002, we adopted a deferred  compensation  plan,  which permits
executive  officers  and key  employees  to defer  receipt of a portion of their
compensation. Deferred amounts accrue hypothetical returns based upon investment
options selected by the participant.  We have amended the deferred  compensation
plan,  effective  January 1, 2005, to comply with new provisions of Section 409A
of the Internal  Revenue  Code.  Deferred  amounts are paid in cash based on the
value of the investment option and are generally  payable following  termination
of employment in a lump sum or in  installments  as elected by the  participant,
but the plan  provides for  distributions  in the event of total  disability  or
death and distributions  upon a change in control.  The plan also provides for a
death benefit of $500,000 for each participant that is a named executive officer
or significant  employee described above or an amount equal to the participant's
annual  salary for all other  participants.  Although  the plan is unfunded  and
represents an unsecured liability of ours to the participants, we have purchased
variable life insurance policies owned by us to insure the lives of the group of
participants  and to finance our obligations  under the plan. As of December 31,
2005 and 2004,  we had an  aggregate  deferred  compensation  liability  of $3.9
million and $2.8 million,  respectively,  which is included in other non-current
liabilities.  As of December 31, 2005, we had deferred compensation liability of
$2.7 million, $128,436,  $42,886 and $28,384 for Mr. Stonecipher,  Mr. Harp, Ms.
Pinson and Mr.  Williamson,  respectively,  included in our  aggregate  deferred
compensation  liability of $3.9 million. At December 31, 2005, the cash value of
the underlying  insurance policies owned by us was $3.7 million and was included
in other assets.

Board of Director Interlocks and Insider Participation in Executive Compensation
Decisions

     During  2005,  we  had  a  compensation   committee  composed  entirely  of
independent  directors as required by the governance  rules of the NYSE.  During
2005 these were Messrs. Belsky and Smith. Members of our compensation  committee
have never been  officers or  employees of ours or any  subsidiary.  None of our
executive  officers serves on the compensation  committee of any entity that has
one or more of such entity's executive officers serving on our Board.

Report On Executive Compensation

     The compensation committee is responsible for establishing  compensation of
Harland C. Stonecipher,  our Chairman, Chief Executive Officer and President and
for overseeing  the  compensation  of our executive  officers to assure they are
compensated  effectively in a manner consistent with our overall  objectives and
to communicate our compensation  policies and the reasoning behind such policies
to  shareholders.  The  compensation  committee met twice and acted by unanimous
consent four times during 2005.

     The  base  salary  of Mr.  Stonecipher  for  2005  was as  provided  in his
employment  agreement with us entered into in 1993.  The principal  terms of his
employment agreement are described elsewhere herein. See "Executive Compensation
and Other  Information - Employment  Contracts and Termination of Employment and
Change-in-Control Arrangements." The level of base salary for Mr. Stonecipher in
the  employment   agreement  was  determined   through   negotiations  with  Mr.
Stonecipher at the time the employment  agreement was entered into, and the base
salaries  of our  other  executive  officers  for 2005  were  determined  by Mr.
Stonecipher  based upon his  assessment of the  respective  executive  officer's
performance  and  potential   contribution  to  our  financial  and  operational
objectives and remained unchanged from the previous year.

     Pursuant  to a  separate  agreement,  Mr.  Stonecipher  receives  a monthly
override  commission  of  $.025  per  active  Membership,   subject  to  certain
limitations,  and a portion of the annualized  commission revenue of PPL Agency,
Inc.,  which was owned by Mr.  Stonecipher as a nominee of ours until January 1,
2006, at which time we acquired  ownership of PPL Agency,  Inc. No consideration
for the sale of PPL Agency, Inc. was paid to Mr.  Stonecipher.  During 2005, Mr.
Stonecipher  earned  $296,939  pursuant  to  these  commission-based   incentive
compensation   arrangements.   These  arrangements   foster  the  goals  of  our
compensation  policies by linking a significant  portion of the chief  executive
officer's  annual  compensation  to the level of  revenues  derived  from active
Memberships, thereby creating strong financial incentives to the chief executive
officer for the  continued  growth of our  Membership  base.  During  2005,  new
Membership  sales increased 12% to 700,727  compared to 624,525 during 2004, our
active  Memberships  in force  increased  6% to  1,542,789  at December 31, 2005
compared to 1,451,700  Memberships in force at December 31, 2004.  Additionally,
active "add-on" Identity Theft Shield Memberships  increased 62% from 283,889 at
December  31,  2004 to 461,094  at  December  31,  2005 and the  average  annual
Membership  fee  increased  more than 4% to $286.60 at  December  31,  2005 from
$274.02 at December 31, 2004. Further, total Membership fees in 2005 were $389.3
million,  up 9.5%  compared to 2004.  Over the last five years,  our  compounded
growth rate of active  Membership  fees has exceeded  12.9% per year and diluted
earnings per share have grown from $1.26 per share to $2.29 per share for 2005.

     Beginning in August 2002, Mr.  Stonecipher began receiving a bonus equal to
one-half of one percent (.5%) of Membership premiums collected,  which links his
compensation with our realized Membership revenues. A change in this arrangement
was made for 2005 and 2004 as described above to tie the  compensation  based on
percentage  of Membership  fees to the  achievement  of specified  thresholds of
total  Membership fees in 2005 and 2004 compared to Membership fees in the prior
year. In 2005,  these  Membership  fee bonuses were reduced by $500,000 based in
part  on  the  fact  that  we  now  own  an  aircraft  previously  owned  by Mr.
Stonecipher.

     We maintain a Stock  Option Plan (the  "Plan")  pursuant to which the Board
may grant  options to purchase  Common  Stock to our  directors  and  employees,
including the executive  officers.  The exercise price of options  granted under
the Plan may not be less than the fair market value per share of Common Stock on
the date of grant. The Board did not grant any options during 2003, 2004 or 2005
to our executive officers and does not currently expect to grant further options
under the Plan.

     In 2002, we adopted a deferred compensation plan for our executive officers
as described  under  "Executive  Contracts and  Termination  of  Employment  and
Change-in-Control  Arrangements." This plan, which was amended effective January
1, 2005 as described above, is intended to supplement our existing tax-qualified
retirement plans to provide the participants with improved long-term  retirement
security.

     Section 162(m) of the Internal Revenue Code provides that we may be limited
in  deducting  annual  compensation  in excess  of $1  million  paid to  certain
executive officers.  The Board of Directors has considered the effect of Section
162(m) on our compensation  program. The deferred  compensation plan was adopted
in 2002 in part to be  responsive to the  limitations  of Section 162, to permit
the  deferral of  compensation  that would not  otherwise  be  deductible  under
Section  162.  In  certain  circumstances  it may be in our  shareholders'  best
interests  to  retain  the  flexibility  to pay  compensation  that  may  not be
deductible under Section 162.

     The  preceding  report is  presented  by the  members  of the  compensation
committee.

     /s/ Martin H. Belsky                /s/ Thomas W. Smith
   -------------------------           ------------------------
       Martin H. Belsky                    Thomas W. Smith
      Committee Chairman                  Committee Member



Shareholder Return Performance Graph

     The following graph compares the cumulative  total  shareholder  returns of
our  Common  Stock  during  the five  years  ended  December  31,  2005 with the
cumulative total shareholder returns of the Russell 2000 Index and the Hemscott,
Inc.  (formerly Media General)  Personal Services industry index. The comparison
assumes an  investment  of $100 on January 1, 2001 in each of our Common  Stock,
the Russell 2000 Index and Media Hemscott's Personal Services industry index and
that any dividends were reinvested.


               Comparison of Cumulative Total Return of Our Stock,
                      Russell 2000 Index and Industry Index






                                         COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
                                     COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS


                              ------------------------ FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET          12/29/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/30/2005

                                                                       
PrePaid Legal Services, Inc.      100.00      85.88     102.75     102.43     149.26     154.40
Personal Services                 100.00     163.05     157.94     197.97     209.10     217.73
Russell 2000 Index                100.00     101.02      79.22     115.16     135.31     139.81







                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT

     The  following  table  sets  forth  certain   information   concerning  the
beneficial  ownership of our shares of Common  Stock by each person  (other than
our directors and executive  officers) known by us to be the beneficial owner of
more than five  percent of the  issued  and  outstanding  Common  Stock.  Unless
otherwise  noted,  the information is based on Schedules 13D or 13G filed by the
applicable  beneficial owner with the SEC or other information provided to us by
the beneficial  owner as of December 31, 2005, which is the date such beneficial
owners were required to report their ownership to the SEC.



                 Security Ownership of Certain Beneficial Owners


                                                                         Beneficial Ownership
                                                                        ---------------------------
                                                                          Number          Percent
                                                                            of              of
               Name and Address of Beneficial Owner                       Shares           Class
               ------------------------------------                     --------------    ---------
                                                                                   
Thomas W. Smith..................................................       3,913,288  (1)    25.4 (1)
Scott Vassalluzzo................................................       2,707,537  (1)    17.6 (1)
Idoya Partners...................................................       1,321,456  (1)     8.6 (1)
Prescott Associates..............................................       1,194,675  (1)     7.8 (1)
Goldman Sachs Asset Management, L.P..............................       1,086,794  (2)     7.0 (2)
Robert S. Pitts, Jr..............................................         779,989  (3)     5.0 (3)

---------------------
(1)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Thomas  W.  Smith  ("Smith")  and  Scott  Vassalluzzo  ("Vassalluzzo")  are
     2,687,437 shares as to which they have shared voting and shared dispositive
     power.  In addition,  Smith  beneficially  owns 1,225,851  shares of Common
     Stock as to which he has sole voting and dispositive  power and Vassalluzzo
     beneficially  owns  20,100  shares of Common  Stock as to which he has sole
     voting and dispositive power. Of the shares indicated as beneficially owned
     by Smith and Vassalluzzo,  3,005,788 and 2,698,437 shares in the aggregate,
     respectively,  are  beneficially  owned in their  capacities  as investment
     managers for certain managed  accounts,  which include the shares indicated
     as  beneficially  owned by Idoya  Partners  and  Prescott  Associates.  The
     address of Smith,  Vassalluzzo,  Idoya and Prescott is 323 Railroad Avenue,
     Greenwich CT 06830. Information is as of March 8, 2006.

(2)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Goldman  Sachs Asset  Management,  L.P.  ("Goldman")  in their  capacity as
     investment  advisors  are 671,831  shares as to which they have sole voting
     and dispositive  power. The address of Goldman is 32 Old Slip, New York, NY
     10005. Information is as of December 31, 2005.

(3)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Robert S. Pitts,  Jr.  ("Pitts") are 642,269 shares  beneficially  owned by
     Steadfast Capital Management LLC, a Delaware limited liability company (the
     "Investment  Manager"),  137,720  shares  beneficially  owned by  Steadfast
     Advisors LLC, a Delaware limited  liability  company (the "Managing General
     Partner"),  137,720 shares beneficially owned by Steadfast Capital, L.P., a
     Delaware  limited  partnership   ("Steadfast   Capital"),   273,264  shares
     beneficially  owned  by  American  Steadfast,   L.P.,  a  Delaware  limited
     partnership ("American Steadfast") and 369,005 shares beneficially owned by
     Steadfast  International  Ltd.,  a  Cayman  Island  exempted  company  (the
     "Offshore Fund").  The Investment  Manager and Mr. Pitts have shared voting
     and shared dispositive power for 642,269 shares of Common Stock.  Steadfast
     Capital has shared  voting and shared  dispositive  power with the Managing
     General  Partner and Mr.  Pitts for 137,720  shares of Common Stock held by
     the  Steadfast  Capital.  American  Steadfast  has shared voting and shared
     dispositive  power with the  Investment  Manager and Mr.  Pitts for 273,264
     shares of Common Stock held by American  Steadfast.  The Offshore  Fund has
     shared voting and shared  dispositive power with the Investment Manager and
     Mr. Pitts of 369,005  shares of Common Stock held by the Offshore Fund. The
     address of each of Pitts,  the  Investment  Manger,  the  Managing  General
     Partner,  Steadfast Capital and American Steadfast is 767 Fifth Avenue, 6th
     Floor,  New York, NY 10153. The address of the Offshore Fund is c/o Appleby
     Corporate Services (Cayman) Limited,  P. O. Box 1350 GT, George Town, Grand
     Cayman, Cayman Islands. Information is as of December 31, 2005.



     The  following  table  sets  forth  certain   information   concerning  the
beneficial  ownership  of our shares of Common Stock as of March 24, 2006 by (a)
each of our directors (b) each of the named executive  officers,  and (c) all of
our directors and named executive officers as a group.







          Security Ownership of Directors and Named Executive Officers

                                                                               Beneficial Ownership (1)
                                                                             ------------------------------
                                                                                Number of        Percent of
               Name of Director or Named Executive Officer                       Shares             Class
               -------------------------------------------                   ---------------    -----------
                                                                                         
Harland C. Stonecipher, One Pre-Paid Way, Ada, Oklahoma 74820..........      1,241,876   (2)         8.1
Randy Harp.............................................................        177,423   (3)         1.2
Kathleen S. Pinson.....................................................         56,033   (4)          *
Steve Williamson.......................................................         13,144   (5)          *
Peter K. Grunebaum.....................................................         36,000   (6)          *
John W. Hail...........................................................         31,412   (7)          *
Martin H. Belsky.......................................................         10,350   (8)          *
Thomas W. Smith........................................................      3,913,288   (9)        26.0
Orland G. Aldridge.....................................................              -               -
All directors and executive officers as a group (9 persons)............      5,479,526   (10)       35.4

-----------------
* Less than 1%.

(1)  Unless  otherwise  indicated  in the  footnotes to the table and subject to
     community property laws where applicable, each of the shareholders named in
     this table has sole voting and investment  power with respect to the shares
     indicated as  beneficially  owned.  The  percentage  of ownership  for each
     person is calculated in accordance  with rules of the SEC without regard to
     shares of Common Stock issuable upon exercise of outstanding stock options,
     except  that any  shares a person  is  deemed  to own by  having a right to
     acquire by  exercise  of an option are  considered  outstanding  solely for
     purposes of calculating such person's percentage ownership.

(2)  Included in the shares of Common Stock indicated as  beneficially  owned by
     Mr.  Stonecipher are (i) 1,011,044  shares as to which he has shared voting
     and shared  dispositive power with his wife; (ii) 20,832 shares owned under
     the ESOP as to which Mr.  Stonecipher  has sole  voting  power,  but shared
     dispositive  power;  (iii) 200,000 shares issuable to Mr.  Stonecipher upon
     exercise of  outstanding  options;  and, (iv) 10,000  shares  issuable upon
     exercise of outstanding options held by his wife earned during the time she
     was a member of the Board of Directors.

(3)  Includes  18,528  shares owned under the ESOP as to which Mr. Harp has sole
     voting power,  but shared  dispositive  power,  and 130,000 shares issuable
     upon exercise of outstanding options.

(4)  Includes 20,148 shares owned under the ESOP as to which Ms. Pinson has sole
     voting power, but shared dispositive power, and 10,000 shares issuable upon
     the exercise of  outstanding  options.  Also,  includes  3,936 shares owned
     under the ESOP by Ms. Pinson's  husband,  also one of our employees,  as to
     which he has sole voting power,  but shared  dispositive  power. Ms. Pinson
     disclaims beneficial ownership of shares that are owned by her husband.

(5)  Includes  1,629 shares owned under the ESOP as to which Mr.  Williamson has
     sole voting  power,  but shared  dispositive  power,  372 shares held in an
     individual  retirement  account and 10,000 shares issuable upon exercise of
     outstanding options.

(6)  Includes 26,000 shares issuable upon exercise of outstanding options.

(7)  Includes  500 shares  owned by a  corporation  that Mr. Hail  controls  and
     30,000 shares issuable upon exercise of outstanding options.

(8)  Includes 10,000 shares issuable upon exercise of outstanding options.

(9)  See "Security Ownership of Certain Beneficial Owners" above.

(10) Includes  426,000 shares issuable upon exercise of outstanding  options and
     65,073  shares  owned under the ESOP as to which the  respective  executive
     officers  and  directors  have sole voting  power,  but shared  dispositive
     power.


              CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     Through December 31, 2005, our Chairman,  Harland C.  Stonecipher,  was the
owner of PPL  Agency,  Inc.  ("Agency").  Effective  January 1, 2006 we acquired
Agency from Mr.  Stonecipher for no consideration,  but prior to the acquisition
we had  agreed  to  indemnify  and hold him  harmless  for any  personal  losses
incurred as a result of his ownership of this  corporation and any income earned
by Agency accrued to us. We provide management and  administrative  services for
Agency,   for  which  we  received   specified   management   fees  and  expense
reimbursements.

     Agency's  financial  position and results of operations are included in our
financial  statements  on a combined  basis after  elimination  of  intercompany
transactions.  Agency  earned  commissions,  net of amounts paid directly to its
agents  by the  underwriter,  during  2005 of  $114,000  through  its  sales  of
insurance products of an unaffiliated company.  Agency had net income of $16,000
for the year ended December 31, 2005 after incurring  commissions  earned by the
Chairman of $56,939 and annual management fees paid to us of $36,000 for 2005.

     John W. Hail, one of our directors, served as our Executive Vice President,
Director and Agency  Director from July 1986 through May 1988 and also served as
Chairman  of the  Board of  Directors  of TVC  Marketing,  Inc.,  which  was our
exclusive  marketing agent from April 1984 through  September 1985.  Pursuant to
agreements  between Mr. Hail and us entered  into during the period in which Mr.
Hail was one of our executive officers,  Mr. Hail receives override  commissions
from renewals of certain  Memberships  initially  sold by us during such period.
During  2005,  2004 and 2003,  such  override  commissions  on renewals  totaled
$75,000, $79,000 and $81,000, respectively. Mr. Hail also owns interests ranging
from 12% to 100% in corporations not currently affiliated with us, including TVC
Marketing,  Inc.,  but which were engaged in the  marketing of our legal service
Memberships and which earn renewal commissions from Memberships previously sold.
These  entities  earned renewal  commissions of $551,000,  $557,000 and $552,000
during  2005,  2004 and 2003,  respectively,  of which  $314,000,  $322,000  and
$300,000, respectively, was passed through as commissions to their sales agents.

     Our new office building contains two apartments,  one for use by certain of
our  visitors  and one for use by our  Chairman  and  Chief  Executive  Officer,
Harland C. Stonecipher and his wife, for his convenience as well as to entertain
visitors  using the visitor  apartment.  The full Board of  Directors,  with Mr.
Stonecipher  abstaining,  has  approved  the  arrangements  for  the use of this
apartment  which require Mr.  Stonecipher  to pay rent to us at a rate of $1,000
per month,  which  exceeds the  estimated  fair market  rental value based on an
outside appraisal.

                COMPLIANCE WITH SECTION 16 REPORTING REQUIREMENTS

     Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and  executive  officers and persons who  beneficially  own more than 10% of our
Common Stock to file reports of ownership and changes in ownership of our Common
Stock with the SEC. We are required to disclose delinquent filings of reports by
such persons  during  2005.  Based on a review of the copies of such reports and
amendments  thereto received by us, or written  representations  that no filings
were required, we believe that during 2005 all Section 16(a) filing requirements
applicable to its executive officers, directors and 10% shareholders were met.

                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     Grant Thornton served as our independent  registered public accounting firm
for the  year  ended  December  31,  2005  and has been  selected  by our  Audit
Committee to continue in 2006. Representatives of Grant Thornton are expected to
be present at the Annual  Meeting,  with the  opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions.

                          ANNUAL REPORT TO SHAREHOLDERS

     Our Annual  Report to  Shareholders  for the year ended  December 31, 2005,
including audited financial  statements,  accompanies this Proxy Statement.  The
Annual  Report is not  incorporated  by reference  into this Proxy  Statement or
deemed to be a part of the materials for the solicitation of proxies.

                   AVAILABILITY OF ANNUAL REPORT ON FORM 10-K

     A copy of our Annual  Report on Form 10-K for the year ended  December  31,
2005 filed with the SEC is available  without charge to any of our  shareholders
who  request  a copy  in  writing  from  us,  Attn.:  Janice  Stinson,  Investor
Relations, One Pre-Paid Way, Ada, Oklahoma 74820.

                    PROPOSALS OF SHAREHOLDERS AND NOMINATIONS

     The Board of  Directors  will  consider  properly  presented  proposals  of
shareholders  intended  to be  presented  for  action at the  Annual  Meeting of
Shareholders. Such proposals must comply with the applicable requirements of the
SEC and our bylaws.  Under our bylaws,  a notice of intent of a  shareholder  to
bring any matter  before a meeting  shall be made in writing and received by our
Secretary  not more  than 150 days and not less than 90 days in  advance  of the
annual  meeting  or, in the event of a special  meeting  of  shareholders,  such
notice  shall be  received  by our  Secretary  not  later  than the close of the
fifteenth  day  following the day on which notice of the meeting is first mailed
to  shareholders.  Every such notice by a shareholder  shall set forth:  (a) the
name and address of the  shareholder  who intends to bring up any matter;  (b) a
representation  that the shareholder is a registered  holder of our voting stock
and  intends  to appear in  person  or by proxy at the  meeting  to bring up the
matter specified in the notice;  (c) with respect to notice of an intent to make
a nomination, a description of all understandings among the shareholder and each
nominee and any other person  (naming such person or persons)  pursuant to which
the nomination or nominations  are to be made by the  shareholder and such other
information  regarding  each nominee  proposed by the  shareholder as would have
been required to be included in a proxy  statement  filed  pursuant to the proxy
rules of the SEC had each nominee been nominated by our Board of Directors;  and
(d) with  respect  to  notice  of an  intent  to bring up any  other  matter,  a
description of the matter,  and any material  interest of the shareholder in the
matter.  Notice of  intent  to make a  nomination  shall be  accompanied  by the
written  consent of each nominee to serve as one of our  directors,  if elected.
All shareholder  proposals  should be sent to our Secretary at One Pre-Paid Way,
Ada, Oklahoma 74820.

     A  shareholder   proposal  submitted  pursuant  to  Rule  14a-8  under  the
Securities  Exchange  Act of 1934  and  intended  to be  included  in our  proxy
statement  relating  to the 2007 Annual  Meeting  must be received no later than
December 12, 2006. To be considered for presentation at the 2007 Annual Meeting,
although not included in the Proxy  Statement for such meeting,  a proposal must
be received  within the time period set forth in our bylaws as described  above.
In addition,  the proxy  solicited by the Board of Directors for the 2007 Annual
Meeting  will confer  discretionary  authority  to vote on any such  shareholder
proposal presented at the 2007 Annual Meeting unless we are provided with notice
of such  proposal no later than ninety days prior to the date of the 2007 annual
meeting.

     The  nominating  committee  has a charter which is posted on our website at
www.prepaidlegal.com. The nominating committee has not adopted a separate policy
relating to  nomination of directors by  shareholders  because the procedure for
nomination  is  governed  by  our  bylaws  described  above.  The  criteria  for
nomination of directors are set forth in the  nominating  committee  charter and
the charter does not address  specific minimum  qualifications  or skills that a
nominee or board member must have. The process used by the nominating  committee
for  identifying  and  evaluating  nominees for our board  consists of reviewing
qualifications  of candidates  suggested by  management,  other board members or
shareholders,  including  personal  interviews  of the  candidate.  The specific
requirements  for nominees from  shareholders  provided by our bylaws  described
above are required to be followed. We have not previously received nominees from
shareholders and,  accordingly,  are unable to determine whether the process for
evaluation of  shareholder  nominees  differs from the process for evaluation of
other nominees.

                                  OTHER MATTERS

     Our Board of Directors  does not know of any other  matters to be presented
for  action at the  Annual  Meeting  other  than  those  listed in the Notice of
Meeting and referred to herein.  If any other  matters  properly come before the
Annual  Meeting  or any  adjournment  thereof,  it is  intended  that the  proxy
solicited  hereby  be  voted  as to any  such  matter  in  accordance  with  the
recommendations of our Board of Directors.






                                                                  
Pre-Paid Legal Services, Inc.                                         ---------------------------------------------
c/o UMB Bank, n.a.                                                                  VOTE BY TELEPHONE
P.O. Box 419064                                                       ---------------------------------------------
Kansas City, MO 64141-6064                                            Have your proxy card  available when you call
-------------------------------                                       our Toll-Free  number  1-888-693-8683 using a
                                                                      touch-tone  telephone  and  follow the simple
                                                                      instructions to record your vote.
                                                                      ---------------------------------------------
                                                                                    VOTE BY INTERNET
                                                                      ---------------------------------------------
                                                                      Have  your  proxy  card  available  when  you
                                                                      access the website www.cesvote.com and follow
                                                                      the simple instructions to record  your vote.
                                                                      ---------------------------------------------
                                                                                      VOTE BY MAIL
                                                                      ---------------------------------------------
                                                                      Please  mark,  sign  and date your proxy card
                                                                      and return  it in  the  postage-paid envelope
                                                                      provided or return it to:  Proxy   Tabulator,
                                                                      P.O. Box 535450, Pittsburg, PA 15253.

 -------------------------------------     ----------------------------------     -----------------------------------
|         Vote by Telephone           |   |          Vote by Internet        |   |               Vote by Mail        |
|       Call Toll-Free using a        |   |       Access the Website and     |   |            Return your proxy      |
|       touch-tone telephone:         |   |           cast your vote:        |   |           in the postage-paid     |
|           1-888-693-8683            |   |           www.cesvote.com        |   |            envelope provided      |
 -------------------------------------     ----------------------------------     -----------------------------------

                                                  Vote 24 hours a day, 7 days a week.
                         If you vote by telephone or Internet, it is not necessary to return this proxy card.

                                        -------------------------------------
                                       |                                     |
                                       |->                                   |
                                        -------------------------------------

                                              Proxy card must be signed and dated below.
                                   ~/ Please fold and detach card at perforation before mailing. ~/
----------------------------------------------------------------------------------------------------------------------
                                           PRE-PAID LEGAL SERVICES, INC.
                               Proxy Solicited on Behalf of the Board of Directors
                    Annual Meeting of the Shareholders to be held on Wednesday, May 17, 2006

     The undersigned shareholder of Pre-Paid Legal Services, Inc., an Oklahoma corporation, hereby acknowledges receipt
of the  Notice of Annual  Meeting of Shareholders and Proxy Statement,  each dated April 7, 2006, and  hereby  appoints
Randy  Harp  and  Kathleen  S.  Pinson,  or  either  of  them,  as  proxies  and attorneys-in-fact, with full  power to
each of substitution, on behalf and in the name of the undersigned, to represent  the  undersigned at our  2006  Annual
Meeting of Shareholders,  to be held in the Liberty  Auditorium at our corporate offices located at One Pre-Paid Way in
Ada,  Oklahoma,  on  Wednesday,  May 17, 2006, at 1:00 p.m., local time, and at  any  adjournment  thereof, and to vote
all shares of our Common  Stock  which the  undersigned would be entitled to vote if then and there personally present,
on the matters set forth below.

                                                     DATED:                                                       ,2006
                                                            ----------------------------------------------------

                                                     ------------------------------------------------------------------
                                                     Printed Name(s) of Shareholder(s)

                                                     Signature(s)
                                                                 ------------------------------------------------------

                                                                 ------------------------------------------------------

                                                     (Please sign exactly as name appears on the proxy card. If  shares
                                                     are  held  jointly,  only  one  holder  is required to sign.  When
                                                     signing as attorney, executor, administrator, trustee or guardian,
                                                     please give full title as such.  If  a corporation, please sign in
                                                     full corporate name by President or other authorized officer. If a
                                                     partnership,  limited  liability  company or other  entity, please
                                                     sign in the name of the entity by an authorized person.)


                            YOUR VOTE IS IMPORTANT

                If you  do  not  vote  by telephone or Internet, please sign and
                date  this  proxy  card  and  return it promptly in the enclosed
                postage-paid envelope, or otherwise to Proxy Tabulator, P.O. Box
                535450,  Pittsburg,  PA  15253,  so  that  your  shares  may  be
                represented  at  the Annual Meeting. If you vote by telephone or
                Internet, it is not necessary to return this proxy card.



                                   ~/ Please fold and detach card at perforationbefore mailing. ~/
-----------------------------------------------------------------------------------------------------------------------------------
PRE-PAID LEGAL SERVICES, INC.                                                                                 PROXY




     
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY  DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE NOMINEES LISTED IN ITEM 1 AND "FOR" THE PROPOSAL IN ITEM
2. IF ANY OTHER  MATTERS ARE BROUGHT  BEFORE THE MEETING OR IF THE  NOMINEES FOR
ELECTION AS DIRECTORS NAMED IN THE PROXY STATEMENT FOR ELECTION AS DIRECTORS ARE
UNABLE TO SERVE OR FOR GOOD  CAUSE  WILL NOT  SERVE,  THE PROXY WILL BE VOTED IN
ACCORDANCE  WITH THE  RECOMMENDATIONS  OF THE BOARD ON SUCH  MATTERS OR FOR SUCH
SUBSTITUTE NOMINEES AS THE BOARD MAY RECOMMEND.

1.   Election of directors:

     |_| FOR all nominees listed below (except as indicated). |_| WITHHOLD AUTHORITY to vote for all nominees listed below.
         If you wish to withhold authority to vote for any individual nominee, strike a line through that nominee's name in the
         list below.
                           (01) John W. Hail                   (02) Thomas W. Smith

2.   Ratify the selection of Grant  Thornton LLP as our  independent  registered
     public accounting firm.

     |_|  FOR                               |_| AGAINST                          |_| ABSTAIN
In their discretion, upon such matters as may properly come before the meetingr any adjournment or adjournments thereof.

                             PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.







          APPENDIX TO PROXY STATEMENT OF PRE-PAID LEGAL SERVICES, INC.
               CONTAINING SUPPLEMENTAL INFORMATION REQUIRED TO BE
               PROVIDED TO THE SECURITIES AND EXCHANGE COMMISSION

     The following is information  required to be provided to the Securities and
Exchange  Commission  in  connection  with our  Definitive  Proxy  Materials  in
connection with our 2006 Annual Meeting of Shareholders. This information is not
deemed  to be a part  of the  Proxy  Statement  and  will  not  be  provided  to
shareholders in connection with the Proxy Statement.

1.   We plan to mail the definitive  Proxy  Materials to our  shareholders on or
     about April 7, 2006.