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Key Questions to Ask

Getting Your Money's Worth

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Key Questions to Ask
Getty/Garry Gay

Everyone knows identity theft is a real problem today. Dozens of companies have crept up over the past few years offering to protect us. Some have made their profit, and disappeared. Some have been legally forced to change the services they offer. So, if you're going to buy a protection program, how do you know it will be a "good" one?

The bad news is no identity theft program can keep you from being a victim. Some companies offer "guarantees", but they are only promising that their program will do what they said it would. The question remains: what does the program do?

How Does It Help?

Most identity theft products are focused on credit and banking. But financial identity theft made up only one-third of all complaints received by the FTC's Consumer Sentinel Network in 2009. That would be the same as having fire insurance that covered your home if it burnt down between the 1st and 10th of any given month. To know if a program will help if you become a victim of identity theft, you need to know how identity theft can affect you. This way you know if the program you're looking at addresses your concerns.

Since different programs do different things, it's also important to be familiar with the different ways an identity theft program can help you. Pricing varies depending on the services you'll be getting. Generally speaking, more services mean higher prices, but there are programs offering minimal services for about the same cost. When you know the different types of services, you're armed to ask the important questions.

Key Questions to Ask

How does the program protect me? The answer will tell you whether it's a reimbursement program or something more inclusive. It's not uncommon for an identity theft program to combine different services in a shiny new package. But if your biggest concern is criminal charges brought up in your name by an identity thief, you may not care very much about credit monitoring.

If there are guarantees, what do they cover? Keep in mind that no program will keep you from being a victim. (It would be the same as your car insurance agent telling you your policy will keep you from having an accident.) But a few companies make product guarantees about how their service will perform. Make sure everything you are told is backed up in writing.

What if I'm already a victim when I sign up? You can't buy fire insurance to cover a fire you just had – they want you to have the insurance before the fire. It's pretty much the same with identity theft programs. Usually. Some programs will still go to work for you if you are currently a victim, but haven't found out yet. Since it can take months or even years to find out you're a victim, it's an important question to ask.

What is my cost if I'm a victim. One sort of identity theft program works on a reimbursement basis. (Your house caught fire, you put it out, now you rebuild it, refurnish it, and we'll give you back some of the money you spent.) One place reimbursement programs come in handy is time off work. If you're a victim of identity theft, you'll be talking with all sorts of agencies and organizations that are only open during business hours. That means time off work, to deal with the mess. A reimbursement may also pay you for some of that time off work…after the fact, naturally. You will receive a 1099 from the company running the service, which you must file on your taxes as income.

Due diligence. Do your homework on the program, but don't let it paralyze you into making a decision on a program. Give yourself a period of time, maybe 48 hours, to do research, write down any questions you still have, and talk with your agent again. It's incredibly easy to put off deciding on a program, or even if a program is right for you. As with all decisions, it's easiest when you set a deadline to address the issue in writing.

How does enrollment work? Programs vary widely on this. Programs that ride on your home-owner's insurance are usually paid as part of your premium so you don't have to think about it. Some programs require a 1-year contract, others do monthly bankdrafts. Often, programs working as part of an employee benefits package can only be elected once a year. All of these are fine, as long as they fit your needs and budget.

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