Is Identity Theft Protection Necessary?

You’ve heard the identity theft protection ads for years, but do you really need it?

Today, dozens of companies sell identity theft protection, so people obviously buy it. But what exactly are they getting, and is it really worth it?

Understanding Identity Theft Protection: Is It Worth It?

Identity theft is a growing problem that affects millions of people every year, with schemes ranging from credit card fraud to insurance and tax fraud. With this in mind, many companies offer identity theft protection plans. But is it worth it? Let’s take a closer look at the features, their value, and whether or not you should invest in one of these plans.

Before diving into the specifics, it's important to remember that fear should never dictate our financial decisions. In 2 Timothy 1:7, Paul reminds us:

“For God gave us a spirit not of fear but of power and love and self-control.”

When considering whether to purchase an identity theft protection plan, look at the facts, pray for guidance, and make an educated decision.

Typical Features of Identity Theft Protection Plans

Identity theft protection plans come with a range of features, though not every plan includes all of them. Here's a look at some common offerings:

• Credit Report and Score Access: Many plans provide access to your credit reports and credit score.
• Credit Report Monitoring: This feature alerts you to suspicious activity, such as new accounts opened in your name.
• Fraud Alert Setup: Plans often help you set up fraud alerts on your credit reports, making it harder for thieves to open accounts.
• Dark Web Monitoring: This monitors for signs that your personal information is being misused on the dark web.
• Fraudulent Account Dispute Assistance: Some plans assist you in disputing fraudulent charges and accounts.
• Social Security Number Monitoring: You'll be notified if your Social Security number is used suspiciously.
• Browser Protection Tools: These tools protect your personal information online and alert you to unsafe websites.
• Insurance Coverage: Some plans include insurance to cover costs associated with identity theft recovery, such as legal fees and lost wages.

These features may sound appealing, but is it worth paying $7.50 to $70 per month for this protection?

Can You Do It Yourself?

Interestingly, most of these features are things you can handle on your own:

• Credit Report Access: You can easily access your credit reports from Experian, TransUnion, and Equifax, or visit AnnualCreditReport.com for free reports.
• Credit Monitoring: Monitoring your credit every six months is simple and effective. You can also set up fraud alerts directly with the credit bureaus.
• Disputing Fraudulent Activity: You can dispute fraudulent charges on the credit bureau websites yourself—no third-party service is required.
• Browser Protection: Browsers like Chrome, Safari, and Microsoft Edge already offer safe browsing tools; you just need to enable them.

There are a couple of features that are harder to manage on your own:

• Dark Web Monitoring: This is more challenging to do without specialized tools.
• Social Security Number Monitoring: While not easy to do on your own, this becomes less critical if you’re already monitoring your credit and disputing fraudulent activity.

What About the Insurance?

Many identity theft protection plans offer insurance to cover financial losses. However, disputing fraudulent activity directly with the credit bureaus is usually sufficient to avoid significant out-of-pocket costs. While it might take some time, handling it yourself is typically manageable.

Here’s an important distinction: These plans offer identity theft protection, not identity theft prevention. They help you fix the problem after it occurs but do little to stop it in the first place.

The most powerful thing you can do to prevent identity theft is to freeze your credit at all three credit bureaus. It’s free and prevents lenders from checking your credit unless you unfreeze it temporarily when applying for new credit. This simple step can prevent thieves from opening accounts in your name.

Should You Buy Identity Theft Protection?

Ultimately, purchasing an identity theft protection plan comes down to personal preference. If having one brings you peace of mind and helps you sleep better at night, go ahead and purchase a plan—but do your homework first. And if a free plan is offered after a data breach, don’t hesitate to accept it.

By staying informed and taking simple steps on your own, you can safeguard your identity without fear.

On Today’s Program, Rob Answers Listener Questions:

• There are so many charities and organizations to donate to, and I'd like to find websites that can help me decide how to allocate my charitable giving. I want to make sure the organizations are using the funds responsibly. What resources can you recommend for researching and evaluating different charities?
• I have a question about an inherited IRA. My husband inherited two IRAs from his mom, who died in 2020. We have yet to take any distributions. I know the SECURE Act requires withdrawing the total amount within ten years. Is there an advantage to withdrawing it gradually, or is it better to just do a lump sum withdrawal at some point?
• My mother purchased some land a couple of years ago, with three small houses on about 3 acres. I filed a transfer-on-death (TOD) deed that I printed off the internet, and it went through. Is that a good thing to do? How does that affect my taxes when I inherit the property?
• I have several accounts that will require me to take required minimum distributions (RMDs) at the end of the year. How do I set it up so the RMD can be paid directly to my church as a qualified charitable contribution to avoid increasing my taxable income?

Resources Mentioned:

• ECFA | Charity Navigator
• National Christian Foundation (NCF)
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App

Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network and American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community and give as we expand our outreach.