Is Identity Theft Insurance A Good Option For You?

Should you sign up for identity theft insurance? The answer to this question will depend on your risk factors and whether you are willing to pay for this type of coverage.

With the use of modern conveniences such as online banking, credit cards, and automated services comes the risk of falling victim to an elaborate scam. Every year, countless people have their identities stolen. This means that someone impersonates the victim in order to gain access to their bank account, use their credit card, or one of many other malicious activities.

If you are the victim of identity theft, you will most likely experience a major hassle when picking up the pieces and re-establishing yourself. This is why many people are turning to identity theft insurance to keep them safe from the countless threats of modern life.

How does ID theft insurance work?

Most companies offering identity theft insurance will regularly monitor your credit report for any changes. They may also monitor your financial accounts and protect you further by looking for unauthorized use of your social security number or personal information. Some even provide computer security software to help prevent your information from being compromised by hackers. 

Identity theft insurance requires you pay a premium every month or annually. In return, if you have your identity stolen, the insurance company reimburses you for many things involved in the process of regaining your identity. This includes phone bills, mailing costs, lost wages, attorney fees, and other expenses.

It's important to note that this type of insurance won't prevent your personal information from being stolen, or reimburse you for any direct monetary losses.  It simply covers the costs of cleaning up the mess from your stolen identity. 

Who needs identity theft insurance?

It is hard to say whether the average person needs identity theft insurance. However, it is definitely a valid choice in some cases.

Some people are at a higher risk of having their identity stolen. If your personal information and social security number have been compromised in a data breach, you are a likely target. If identity theft has happened to you before, unfortunately it is more likely to happen again. You are also at a higher risk of having your personal data stolen if you conduct a lot of online business, including trading, bank account management, or buying or selling products or services. In these cases, identity theft coverage is probably a good option to consider.

But for the average person, the actual chance of having your identity stolen is fairly low, and insurance might not be necessary.

Where can you find identity theft coverage?

Identity insurance is becoming more and more popular with many companies offering their customers the option to purchase this type of insurance. Ask your current insurance company if they have any plans that will protect you from identity theft. You can also look into the services offered by AAA or various services offered through your employer. 

Even though all three credit bureaus offer credit monitoring services, they often cost more than other online options that focus solely on identity theft coverage. Some of the main companies offering these services include:

  • LifeLock
  • IdentityForce
  • ID Guard
  • ID Watchdog

Prices for this type of insurance typically range from about $10 to more than $30 a month. However, you shouldn’t buy the insurance simply out of fear. Analyze your situation objectively to decide whether you are at risk or not, and if the policy is worth the price for what it covers. You also want to make sure any service you consider monitors information from all three credit bureaus, so nothing slips through the cracks. 

The following articles offer more information on protecting yourself against identity theft:

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