As one of the 22 million people whose information was compromised in the 2015 OPM breach, the question of whether or not to pay for identity insurance became very important very quickly. Although the government is providing monitoring for a limited time, it is just that – limited.
So then the question becomes whether to spend money to extend it.
How Your Brain is Hard-Wired to Lose Money
This is one of those areas where it is easy to fall into one of the hard-wired money traps. It seems that when we make choices between alternative that involve a certain amount of risk, we choose differently based on whether the choice is framed as a potential gain or a potential loss.
- Most of us will choose a small certain gain over the chance of a larger, but not guaranteed one. We’ll take a sure $100 over the 50/50 chance of $200 or nothing
- When faced with a loss, we prefer to risk a large loss to avoid a smaller one.
This last part is where identity insurance or credit monitoring services come into the picture. They represent a small loss, for sure. Only a few dollars a month. The loss they help you avoid could be a large one, but the chances of it aren’t very likely. Estimates I’ve seen run around 10% of the population. “It won’t happen to me” is a pretty safe bet.
Except in the last year, it has happened to me and to three other people I know.
What’s the Risk?
I got off easy. Someone somehow gained access to my debit card information (which was never out of my possession) and made a couple of charges at Target. The total was under $100. I didn’t catch it because I had just returned from out of town and hadn’t checked my bank account for a few days. By that time I wasn’t certain that I hadn’t been to Target. My bank caught the problem and I was never out any money. I was lucky.
One of my friends spent over 2 weeks trying to get her money back after her checking account was completely cleaned out. She is a single parent, so this was a major problem. The other person I know also had his bank account cleaned out. He is a disabled Veteran and retired. It also took him about 2 weeks to get everything straightened out. Each of them lost access to about $2,000 while they were getting things sorted out. The Veteran had no other funds to access and had to rely on family to get him through until the funds were back in his bank.
It Isn’t Just Your Bank Account
Through the monitoring that the government provides for free for me now, I was recently notified that my primary email account is floating around in the nether regions of the internet. Probably just like yours, that email account is connected to almost everything I do. When was the last time I changed the password? The last time I forgot it, of course. And that password? I don’t forget it very often because I use the same one for everything. I know I’m not alone here.
What about your Social Security number? Your health insurance information? If you aren’t a criminal, you probably can’t even begin to think about how your personal information can be used out in the world.
It Isn’t Prevention
To be fair, this insurance isn’t prevention. Your information can still be hacked or stolen. What it can do is provide an early warning system and alert you to a problem you might not otherwise know existed. And the companies that provide it also provide assistance when something does happen. When I consider the time and energy my two friends spent getting their money back, it seems like a small price to pay. My single Mom friend was also self-employed at the time, so she lost a good bit of income during that time because she was spending all her time working to get her money back.
Let’s Do the Math on Identity Insurance
Let’s say you spend $10/month on identity insurance. That’s $120 a year. It is a small loss. Compare that to having your bank accounts cleaned out. How much is in there? A couple of thousand? More?
Compare it to spending most of two weeks focused on trying to get the problem fixed. How much money would you lose if you weren’t able to work in your business for two weeks?
Just to be sure, I purchased my own Identity Insurance, for less than $10/month. I get an email if any of my personal information is somewhere it shouldn’t be, and assistance getting things put back right if necessary.
This is the identity insurance I use. If you click through the link and decide to use it, too, I’ll get a little commission. It’s how I’m funding my retirement 🙂
What Else Can You Do?
Oh, and the password that I used for everything? No more! I started using LastPass. Now all my passwords are completely unmemorable gobbledygook, they are all unique, and I don’t store any of them in my browser. I still use one password, but now everything goes through LastPass. This is actually much simpler AND more secure. The basic service is free, but if you want access across all your devices (who wouldn’t?) it will set you back a whopping $12 a year.
Identity Insurance in a Nutshell
Identity insurance is one of those services you hope you never need and chances are that you won’t. Will you accept the small loss that having it will incur or will you take your chances on the much larger loss (in time and energy, if nothing else) that could happen?