I recently completed my first obstacle course race (OCR for short) – Tough Mudder. It was a ton of fun!
…Not so much for my shoes though. They got a bit muddy and wet so I headed over to see the nice people at Fleet Feet Tucson and got me a new pair.
You know, I’m a big fan of having the proper equipment and protection – a must for any activity.
While there is a portion of the running community that does their running barefoot, I think it’s safe to say that the majority of people run with shoes.
I know what you’re thinking: this isn’t a difficult question, Jason, it’s the same reason why boxers wear gloves, drivers wear seat belts, bikers wear helmets…
I’m going out (quite sarcastically) on a limb here, but I’m guessing the reason is quite simply … for protection.
Just like the runner and the boxer, as you’re running through the path of your financial life, you’ll want to ensure you’re protecting your financial body.
Financial protection can take many different forms. Often when the topic arises about protecting yourself or your family financially, you might automatically jump to the idea of insurance. Specifically, you might think of life, health, vehicle or disability insurance.
This is great and all, as these are important topics. Today, however, I’d like to focus your attention on protection as it relates to your identity.
As a side note, there is actually an insurance product called identity theft insurance – which I’ll talk about in a bit.
Before we get there and dig into other details, let’s make sure we’re on the same page.
What is your identity?
Quite simply, your identity is all the stuff (as in data and information) that makes YOU.
I’m talking about your social security number, bank account information, birth date, and all the answers to those “security” questions like your mother’s maiden name, the name of your favorite cartoon character, your first cat, Fluffy, and all that good stuff.
Have you ever forgotten the answer to any of the many security questions you likely have riddled across the internet?
I know I have. Even though I tend to have a really great memory – long term more than short term – sometimes I just can’t remember which superhero I liked as a child. So, when I have to remember if it was Batman or the Hulk…I get a bit frazzled 😉
As you are likely well aware, your identity is pretty important. Sadly, it doesn’t become obvious for many until identity theft occurs.
What is identity theft?
You guessed it.
It’s when a thief (or team of thieves) steal a portion or all of your personally identifiable information and use it for their own benefit or initiatives.
Just like protecting your belongings in your home – using locked doors, alarm systems and such – you should be protecting your identity.
Before I get into some specifics, let me talk more about this thing called identity theft insurance.
Identity Theft Insurance
When you hear the term insurance, you should automatically think risk transfer.
In effect, when you purchase insurance, you are essentially transferring risk from yourself to someone else (usually a large corporation). You’ll then pay a fee, called a premium, to the company.
Later, if you suffer a qualified loss, the company will come in and cover the expenses (up to the policy limit) and ultimately minimize your out-of-pocket expenses down to what is called a deductible.
The deductible is what you pay out-of-pocket (in addition to your normal premium) to help cover the loss.
It’s important to note…
Insurance is not retroactive.
Most people understand that they can’t buy a car and purchase auto insurance later and after an accident or other loss like theft or a hail storm. Likewise, you can’t buy life insurance for someone already six-feet under.
The same applies to identity theft insurance. It must be purchased prior to the loss in order to be effective.
Over the past decade or so, there have been many companies popping up to provide identity theft insurance coverage. I’ve met with a number of clients who have purchased coverage after the fact – only to find they are met with the company representatives telling them that they are unable to assist.
Don’t put yourself in that position. Also, don’t blindly assume you require identity theft insurance in the first place.
While the cost of this type of insurance may not be that much in the grand scheme of things, it’s important to fully understand what you’re purchasing and why.
Most times, insurance products related to identity theft aren’t actually insurance products at all. Instead, they operate more like cost reimbursement programs, bundled with some sort of data monitoring service.
What about credit monitoring services?
I’ll keep my response to this question really short and sweet: I don’t recommend them.
Because I said so… Just kidding.
The reason is because they cost you money that you probably don’t need to spend. There are other options that exist that won’t cost you an ongoing fee. However, if you’ve been a victim of a data breech, the organization affected might provide you with a free monitoring subscription. In such a case, go for it.
Give identity thieves 2 jabs and an uppercut!
If I’m not big on either identity theft insurance or monitoring, what do I recommend?
…I say, round up all the thieves and give them a couple jabs and an uppercut to the jaw!
That, my friends, is why boxers wear gloves.
Realistically, though, you can give them a good ol’ knock out punch simply by how you proactively protect your personal data and information.
Help protect your identity with these steps:
- One man’s trash is another man’s treasure. Start simple. Before you take out the trash, ensure you haven’t included important data in the wastebasket. Invest in a quality paper shredder and get in the habit of erasing your identity from the trash. I know it may seem far-fetched but it’s possible for information to get into the wrong hands by way of the trash.
- Be mindful. With more and more data being delivered and stored electronically, it’s important to be mindful about how you share this information. First, resolve to never send sensitive information via a regular email message/attachment.Email is not a secure means of communication. Perhaps more importantly is what happens to that email after it’s sent and received.Data that is not protected can wind up anywhere – including in the hands of thieves.It is best to remove any sensitive information that is not required by the recipient. This can be done the old-fashioned way with a Sharpie, prior to scanning the document. Otherwise, you may wish to invest in Adobe Acrobat Pro which will allow you to ensure encryption with a strong password of any PDF file.Once the file is protected, transport to the recipient through a file sharing program like Google Drive or DropBox with encryption from something like BoxCryptor or Box.
- Don’t carry important information with you all the time. Leave your social security cards and other important documents at home. A small fire safe is a good place for these and other important documents.If you require the documents due to new employment, etc. take them out and promptly return them after use.
- It’s 2016. You are no longer allowed to have any excuses for weak passwords like your last name and birth date, and using devices that are not encrypted.If you are confused about what makes for a strong password, check out this password generator tool by Symantec.Also, review out this article for information on how to encrypt your iOS or Android device.Here are some tips for keeping other digital data secure.
- Lock down those credit reports. Your credit reports are incredibly important. Most (if not all) of the identity theft cases I’ve assisted with can be traced back to open credit reports. That is, little to no barriers existed between the reports and thieves’ abilities to get their hands on them.If someone is able to get your birth date and social security number, it is possible for them to open credit accounts in your name. However, there are some rather simple ways to protect against this:Fraud Alerts: You may place fraud alerts on your credit report which requires any creditors to go through additional hoops and hurdles to verify your identity – prior to opening any account in your name.Security Freeze: This action literally freezes your credit report and limits, or even prevents access altogether, until lifted.There is a fee for this in some states, but that small fee can pay big dividends.
Identity theft and scam expert Rob Douglas, of IdentityTheft.info, says “when it comes to preventing ‘new account fraud,’ there is no better step you can take than initiating a security freeze on your credit report at all three major credit bureaus.”
I typically recommend this option if you are not expecting to open any new accounts in the near future (e.g., within 6 months).
You may find out more details about the fraud alert and security freeze options at the Federal Trade Commission website by clicking here.
- Be careful who you do business with. I highly recommend to ask your chosen professionals about how they safeguard your personal information.I love it when prospective clients of mine ask me about this.Know who you are working with and whether or not they help protect your personal information.
- Simplify. Consider closing old accounts and/or reducing the number of accounts you have (e.g., old 401(k)’s, bank accounts, etc.). Doing so will help to ensure you keep security tight and don’t wind up overlooking old accounts and data.
As you can see, there are quite a few ways that you can effectively protect your identity. Most of these take little time and cost you nothing in the way of dollars and cents.
Now you know why runners wear shoes and boxers wear gloves – yes, for protection. 😉
It’s important to understand what insurance actually is and if you need it (for any purpose – not just identity theft protection).
I know this can be quite a lot of information and quite confusing at times. Have a question? Subscribe below and send it to me. I’ll do my best to help.