Is Identity Theft Protection Worth It?

Why is it important to have identity theft protection?

Identity theft protection can reduce the risk of your identity being stolen, which means it can be an invaluable service. Protection offers a few key benefits:

• Prevent a damaged credit score that can take years to correct.
• Save time restoring your credit.
• Avoid paying for identity theft restoration services.
• Reduce the risk of lost money or frozen credit.
• Lower the chance of loan and credit application denials.
• Minimize the possibility of losing health insurance or facing insurance claim denials.

Many of the top identity theft protection services cost between $7 and $30 per month, or between $84 and $360 a year, so it can be a small price to pay for peace of mind. Depending on the specific plan you sign up for, you may get some or all of the following services:

• Credit monitoring
• Bank account monitoring
• Restoration services for victims
• Expense reimbursement for restoration services
• Dark web scanning for personal information
• Credit and spending alerts to help identify attacks
• Virtual protection network (VPN) services for online protection

However, it’s important to note that these services aren’t a 100% guarantee that your identity will be safe. They can help prevent some attacks on your personal information and may even lessen the damage done if a theft occurs, but no service will prevent it entirely.

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Pros and cons of identity theft protection

Identity theft protection will provide some peace of mind, but its limitations and downsides could mean it’s not a worthwhile expense. Consider the pros and cons of identity theft protection carefully before deciding if it’s right for you.

Who needs identity theft protection the most?

Anyone can benefit from identity theft protection, but there are certain individuals who are more likely to see an upside that justifies the cost.

• Previous victims: Unfortunately, having your identity stolen makes you more likely to be targeted again, as attackers may sell your info. Falling victim to a data breach also makes you more susceptible.
• People with a large digital footprint or high visibility: Sharing personal information via social media and logging into accounts that store personal data both increase your exposure to ID theft. Individuals with a public presence (politicians, real estate agents, online influencers, etc.) are also at greater risk because their activity is easier to track.
• The elderly: Scammers may target the elderly using social engineering and deception. Older individuals are more likely to have accumulated wealth and be in more vulnerable positions, especially when it comes to healthcare.
• Younger individuals: Young people are more likely to have “clean” Social Security numbers that are easier to develop into a false identity, and they’re less likely to have protections and alerts in place to catch ID theft.

If you fall into any of these groups, particularly if you’ve been a previous victim of identity theft or were notified about a legitimate data breach, then identity theft protection is likely worth the money. Compared to the potential financial and emotional damage identity theft can lead to, a protection plan is a small price to pay.

What does identity theft protection do?

Understanding how these protection plans work can also help you decide if it’s a good fit for you. Additionally, knowing what identity theft protection includes can help you find the right type of plan that offers the features most valuable to you.

Identity theft protection plans vary widely in what they offer, but many include some or all of the following.

• Credit monitoring: Providers will monitor your credit report and alert you of any suspicious activity. They may also help you place a freeze on your credit report.
• Account monitoring: Providers may also offer to monitor bank account and credit card activity for added protection.
• Fraud coverage: Some plans include reimbursement for any expenses or losses related to fraudulent activity on your accounts.
• Restoration services: Many plans will help guide you through the process of restoring your identity and fixing your credit. Having that support can help reduce stress and even limit your exposure to additional attacks.
• Reimbursement for expenses: Some companies offer reimbursement for any expenses related to restoring your identity, including legal fees, lost wages and even medical care from mental health professionals helping you deal with the situation.
• Dark web monitoring: Providers can scan websites on the dark web to see if your personal information shows up on black-market websites.
• VPN services: Some companies include VPN access, which allows for safe, private internet usage to reduce the risk of a cyberattack.
• Additional online protection services: You may also get access to password managers and antivirus software for enhanced protection.

Identity monitoring vs. credit monitoring

Something else to keep in mind as you look for an identity theft protection service is the type of protection you need. Most services within a plan fall into one of two categories: identity monitoring or credit monitoring.

Identity monitoring is more comprehensive and may include your provider monitoring and alerting you regarding the following:

• The presence of any personal information leaked online or on the dark web
• Medical records and medical insurance information
• New non-credit accounts in your name, including utility lines
• Public records and any changes in address or other personal information
• Suspicious activity in bank accounts or on bank cards

Credit monitoring is also useful on its own in many cases, but it has a more limited scope and will only provide alerts regarding suspicious activity found on your credit report. That can include:

• Unusual spending activity on credit-related accounts
• New lines of credit opened in your name
• New credit inquiries, including soft inquiries
• New authorized users on existing accounts
• Changes to your address or other personal information on your credit report

» MORE: How to check for identity theft

Do I need identity theft protection?

Whether or not you should pay for identity theft protection is your decision, but it can help to consider your risk level. If you fall into a high-risk category, then identity theft protection is a small price to pay for added safety and peace of mind.

It’s also useful to think about exactly what’s at stake if your identity is stolen. Consequences vary widely depending on the extent of the theft, but the following are all possible results of identity theft:

• Inability to secure housing due to denied lease or mortgage applications
• Inability to access new lines of credit
• Damaged credit for up to 7 to 10 years
• Time and money to restore your identity, including time off work and a loss of wages
• Potential legal fees and other charges that can add up to thousands of dollars
• An increased risk of identity theft going forward

Compare these consequences of identity theft to the cost of a protection plan, which usually falls between $7 and $30 per month. If you’re at minimal risk, or you already have some protection in place, like using a VPN for web browsing or a password manager, then additional monitoring may not be worth it.

Credit card companies, banks and credit bureaus provide free services like credit freezes, coverage for fraud and credit monitoring.

On the other hand, professional services like LifeLock give you greater peace of mind and can end up saving you time and money if you do fall victim to ID theft. They also save you time by monitoring your accounts and can often catch issues more quickly, leading to a faster resolution.

When looking for a plan, think about the number of people the plan should cover, your risk of theft and the services included. Ultimately, you should assess your exposure to fraud, review free options and then decide if the cost of identity theft monitoring is worth the added security and peace of mind.