Is Identity Theft Insurance Right for You?

Posts Tagged ‘Insurance’

Is Identity Theft Insurance Right for You?

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In light of how widespread identity theft has become, it may be a good idea to purchase identity theft insurance.

Identity theft claims more than 10 million victims annually in the U.S. alone, according to the Federal Trade Commission.

Even children are often subjected to identity theft, leading the FTC to recent warn parents about the increased risk of their kids being targeted during back-to-school season.

And just last week, authorities broke up the largest ever identity theft ring ever nabbed. Officials in the greater New York City area arrested more than 100 individuals and charged them with perpetrating at least $13 million in identity theft and credit card fraud on unsuspecting consumers.

Fortunately, there is a way to protect yourself and your family – in part, at least – from the financial sting of identity theft.

A handful of insurance companies nationwide offer identity theft coverage, including State Farm, Farmers, Allstate and Nationwide. The cost to buy this insurance ranges from about $25 to $100 a year and coverage usually goes up to around $25,000.

Since the average victim of identity theft spends about 200 hours and $1,000 cleaning up the mess brought on by this heinous crime, identity theft insurance reimburses you for a range of things like attorney’s fees, phone bills, and time lost from your job.

Also, some credit monitoring services also include identity theft insurance coverage.

How Big a Risk is ID Theft?

Buying any form of insurance is really all about the numbers. The same is true for life insurance, health insurance, car insurance, and yes, even identity theft insurance.

When you purchase insurance, you’re making a calculated decision. You’re betting, essentially, that a given peril (such as having a car accident or being victimized by identity theft) may in fact happen to you (although you’re hoping that it won’t).

The insurance company that sells you the insurance is making a bet too. They’re betting that the danger or peril in question won’t, in fact, happen to you (and they’re hoping it won’t also). At the very least, they’re hoping that a specific danger won’t happen to too many of their insured clients.

Despite the odds of something happening, insurance companies know that in any given year, for any type of insurance, they’re going to pay out a certain number of claims.

The two big questions really are: who will file a claim and how much of a payout will that person be seeking? When it comes to identity theft, it’s almost a crapshoot on that first question.

Identity Theft Can Strike Anyone – Even the Rich and Famous

Anyone can be struck by identity theft, from the anonymous “Average Joe” to well-known celebrities and very rich individuals. Some famous people who have been victims of identity theft include:

Ben Bernanke, the chairman of the Federal Reserve Board
Warren Buffett, the billionaire investor and head of Berkshire Hathaway
Tommy Hilfiger, the clothing designer and fashion guru
J.K. Rowling, the author of the Harry Potter book series
Oprah Winfrey, the popular talk show host and media mogul
Tiger Woods, the professional golf legend

The Odds Are You May Be Victimized Too

Clearly, identity theft is an equal opportunity hazard confronting us all. Concerning that second question, about how much in claims will be paid out, insurers have a bit more insight.

If the numbers on identity theft are to be believed, and current wisdom has it that about 10 million Americans succumb to identity theft each year, then that suggests the average person has a 3% chance of becoming an identity theft victim in any given year. So far, the “odds” work in the insurance company’s favor.

But when looking at those numbers over time, the numbers change exponentially. Those 3% odds grow dramatically each year, magnifying the likelihood of being struck by identity theft over a span of, say, 20 or 30 years.

In other words, the odds are actually fairly high that you will, at some point, be hit by identity theft. If and when it happens, that coverage could prove invaluable.

Getting Help in the Aftermath of Identity Theft

Hopefully, you’ll never be ensnared by the heinous crime of identity theft. If you are the victim of identity theft, however, act immediately.

Alert the credit bureaus so they can put a notice in your credit files. Notify your local police department, so that you have a record of the contact the Federal Trade Commission (877-ID-THEFT or www.ftc.gov), and seek help from the Identity Theft Resource Center (858-693-7935 or www.idtheftresource.org) in San Diego.

“Ask The Money Coach™” is a syndicated column written by personal finance expert Lynnette Khalfani-Cox, co-founder of the free financial advice blog, AskTheMoneyCoach.com. Follow Lynnette on Twitter at @themoneycoach.

Crunch Time: 5 Tips For Staying On Top Of Your Finances

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Author: The Money Coach

The end of 2011 is fast approaching. Here are 5 tips to help you stay on top of your finances and finish 2011 on top of your game.

Tip #1. Check your credit report

Your credit rating determines everything today — the loan rate you’ll get on mortgages, credit cards or auto loans; as well as the rate you’ll pay for life and auto insurance. Your credit even affects your ability to rent an apartment and get a job. The Society for Human Resources says that nearly 60% of all employers do credit checks before making hiring decisions.

By law, you’re entitled to get a free copy of each of your credit reports once a year from Equifax, Experian and TransUnion, which are the “Big 3″ credit reporting agencies. Unfortunately two-thirds of all Americans haven’t seen their credit reports in the past year, according to a survey from the National Foundation for Credit Counseling.

Website Resource: http://www.AnnualCreditReport.com – This is the federally-mandated website where consumers can get truly FREE credit reports — without having to buy anything or sign up for any kind of
7-day trial, or credit-monitoring service.

Tip #2. Negotiate for a better credit card deal

Too many people are paying way too much money for the privilege of having a credit card in their wallet. Some people are being charged 20% or even 30% interest rates by credit card companies — even as
interest rates are relatively low.

The average interest rate for a variable rate credit card is around 15%. So if you’re paying more than that, it’s time to call your credit card company, and ask for a lower rate. If they won’t budge, take your
business elsewhere.

Website Resource: http://www.CardRatings.com – This is a great, free consumer website where people can comparison shop for the best available credit card deals and learn about the responsible way to use
credit.

Tip #3. Protect yourself with insurance

None of us wants to think about something bad happening – like a medical illness or an accident. Even fewer people like to think about their own mortality. But the fact is: we’re all mere mortals. We get
sick, we have car crashes, and we’ll all die one day.

Savvy individuals know it’s a smart idea to plan for life’s “What if” scenarios. So do yourself a favor and make sure your financial “Plan B” includes the proper insurance coverage — just in case. Life
insurance is particularly important.

Website Resource: http://www.Insurance.com – This easy-to-use site lets people search, free of charge, for all of their insurance needs — and get the cheapest quotes available for life insurance, disability insurance, car insurance and more.

Tip #4: Educate yourself/Ask for Help

Too many people suffer in silence when it comes to their financial troubles. They’re up to their eyes in credit card debt. They’re behind on their mortgage. They’re grappling with medical bills they can’t pay
– and they’re completely overwhelmed.

Unfortunately, we live in a country where – up until recently – financial literacy hasn’t been a priority. If you’re not financially educated, you’re at risk of being scammed and economically taken advantage of. Or you may simply make financial mistakes that can take you months, if not years, to recover from.

Tip #5: Create a realistic budget

Many people dread to hear the word “budget.” But if you don’t have a realistic budget, you’re probably over-spending and likely have cash flow problems.

A budget isn’t something to be feared. It should be welcomed. A budget helps you stay out of debt, know where your money is going, and allows you to reach your future financial goals — like buying a house or
starting a business.

Website Resource: http://www.Mint.com – This free, online budgeting software service is a snap at helping consumers keep their budgets on track. Mint will even send you email or text alerts about your spending to make budgeting easier.

Top 10 Smart Financial New Year’s Resolutions

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Author: The Money Coach

By Lynnette Khalfani-Cox, The Money Coach

Eliminate credit card debt. Answer this question: Do you really want to be in debt year after year and living paycheck to paycheck? If you said “No,” then it’s time to get serious about managing your money and getting rid of excessive debt. You can do it – but you must have an action plan and you must stick to it. Get help from the National Foundation for Debt Management (www.NFDM.org), a reputable non-profit agency.
Slowly set aside 3 months’ savings. If an emergency happens – from a job loss to a car breakdown – your savings cushion will protect you from resorting to credit cards. Get free wealth-building tips and pointers on how to save more at www.AmericaSaves.org.
Prepare your taxes early. Get any tax form you need from the IRS at www.IRS.gov and file your taxes ASAP. You’ll avoid the procrastination and stress, as well as the hassles and long lines, at the Post Office on April 15th. Early filers also get faster refunds.
Make a financial plan. Start writing out your financial goals and what it will take to achieve them. Get help from the Financial Planning Association (www.FPAnet.org).
Create or update your will. Nobody likes to think about his or her own death. But you can’t ignore reality. Look at the Hurricane Katrina, 9/11 or the unfortunate, 150,000+ victims killed by the Tsunami that spread across Asia and Africa. Tomorrow isn’t promised. For a low-cost will, visit www.buildawill.com or www.legalzoom.com.
Fund a retirement plan. If you have a 401(k) or 403(b) plan at work, start contributing, or increase your contribution. Learn all about 401(k) plans at www.401k.org. No 401(k) plan or you’re not eligible for it? Then open an Individual Retirement Account.
Ask for a raise. List the ways you’ve contributed to your company’s prosperity or your department’s well being, and approach your boss for a raise. The Wall Street Journal’s Careers section has tips for getting a pay hike at www.wsj.com. If you work for yourself, give yourself a raise by raising your prices or offering higher-end products and services.
Get proper insurance. Get life insurance worth 5 to 10 times your salary, and adequate coverage for your valuables and property – home, car, etc. – too. If something goes wrong, you and your family will be so glad you did. Find quotes at www.insurance.com.
Share your knowledge. Mentor a young person, teach your children about “wants” vs. “needs,” or tell a friend about some smart financial tips you have learned.
Improve your financial record-keeping. Get your paperwork in order, and keep good records all year round. This will save money in the long run and reduce your aggravation come tax time. Try the free online budgeting and record-keeping tools at www.mint.com.

More Than Half of U.S. Households Lack Life Insurance: Survey

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Author: The Money Coach

By Lynnette Khalfani-Cox, The Money Coach

More than half of all American households don’t have life insurance, potentially jeopardizing millions of families’ financial security in the event of a loved one’s death.

According to a survey from LIMRA, a financial services industry group, the percentage of U.S. households with life insurance coverage stands at the lowest level in 50 years. LIMRA reports that only 44% of U.S. households own an individual life insurance policy, which gives a cash payout to one’s beneficiaries when a policy holder dies.

Unfortunately, the recent economic recession has taken a toll on family budgets, and life insurance is one item that’s been sacrificed as people struggle to make house payments, keep up with medical bills or pay credit cards and other debts.

Read the rest of this article on WalletPop

‘Standing on Shaky Ground’ report finds Americans deeply affected by economic tremors (askamoneyexpert.com)
All-Cash Home Purchases: Looking Behind the Numbers (askamoneyexpert.com)
Fewer Americans buy life insurance (usatoday.com)

Ask The Money Coach

Posts Tagged ‘Insurance’