When the Best Insurance Isn't Insurance

I love the insurance business. It gives people peace of mind. It's like gambling in reverse: You put out a little money, and if something bad happens, you win and the "house," (the insurance company) loses. In my book, insurance is one of the greatest industries out there.

As with gambling, the odds are stacked against you. Insurance companies use complex math to make the actuarial ta
bles that guarantee that they "win." The payouts will always be less than the premiums.

For example, there are about 400,000 house fires each year in the U.S. Sounds like a lot, right? The reality, though, is that with over 100 million residences, the chances are only .4 percent that your house will be hit in a fire. If you live to 200, there is a good chance that your home will burn down. Still, you pay $20 a month (or whatever) for fire insurance just to guard against that small possibility. Insurance companies make out like bandits by playing those kinds of odds.
Go on down the list -- auto, life, car -- and that's how it works.

By contrast, the odds that you will become a victim of identity theft are far greater. This year, the FTC estimates that there will be over 10 million new victims of identity theft. That means that your chances of becoming an ID theft victim are about 1/30 or three percent -- only about 10 times greater than the odds that your house will burn down.

Does anyone sell identity theft insurance? No. You know why? Because the odds are against it being profitable to do so. It's like flood insurance if you live next to a river -- very difficult or very expensive to obtain. So we have this tremendous threat and nothing to protect us from it, at least in the realm of traditional insurance. You can get fraud insurance, but not identity theft insurance.

Would you walk down a dark alley in a bad neighborhood unprotected? Of course not! Yet this is what we are expected to do when it comes to identity theft, at least where traditional insurance is concerned.

Fortunately, there is a way to protect yourself from identity theft. Products have been developed to help families monitor their identities. This is the only defense because if it happens, early detection is your best bet for quick and easy resolution. The best of these products even have fraud insurance built in!