Car insurance, health insurance, homeowners insurance — there are plenty of protections people prioritize to save money and headaches in case of an incident. But for retirees, experts say there’s another type of insurance that might also be good to have in some cases: identity theft insurance.
Why? If you’re retired and become a victim of identity theft, you could have more to lose and less time to recover from a financial thumping.
Roughly half a million incidents of identity theft were reported in the third quarter of 2025, according to the Federal Trade Commission. And according to SeniorLiving.org, which parsed FBI data from 2023, people older than 60 accounted for 24.08% of identity theft claims but 41.46% of total financial losses.
That doesn’t necessarily mean that if you’re retired, you should immediately call your insurance broker and buy identity theft insurance. But you may want to at least consider it. Here’s what to know, according to experts:
Identity theft insurance can potentially save you a lot of money.
That is, it potentially can save you a lot of money if something goes wrong. Now, it’s important to note that ID theft insurance will not replace any money stolen from you, if your identity is actually pilfered. That might lead you to wonder, “Then what good is identity theft insurance, and how can it save me any money?”
“It’s designed to ease the financial and administrative burden if you become a victim,” said Erika Tortorici, owner and principal of Optimum Insurance Solutions in Hamilton, Massachusetts. “It can help cover legal fees, identity restoration costs, lost wages, certain unrecovered funds, or even provide temporary funds while you’re waiting for reimbursement from a bank.”
In other words, the value comes in because you could spend a chunk of money trying to get your identity back ― and a lot of time. According to a 2024 Javelin Strategy & Research study, the average consumer spends about 10 hours restoring their identity once it has been stolen (such as, working things out with credit unions and banks, collection agencies, lenders or medical facilities; disputing fraudulent charges; and convincing everyone that whoever took out these loans or paid for these services wasn’t you).
But even if identity theft insurance did pay back money that was taken by a criminal, you probably wouldn’t need it to. If your identity is stolen and you lose a fortune, federal law already generally mandates that you’ll eventually get your funds returned, at least with your bank. (It can be another story with retirement firms, though many firms, like Fidelity and Charles Schwab, offer guarantees that if your cash is stolen, and it isn’t your fault, you’ll get your assets back.)
All of that said, if scammers convince you to take your own money out of your checking account or retirement account and send it to them in the form of gift cards or cryptocurrency, you are typically out of luck, because you authorized the withdrawal, though even that’s starting to change.
The bottom line: Identity theft insurance doesn’t replace stolen money, but it does pay for all of the other expenses you may incur in the aftermath of an identity theft crisis.
Abraham Gonzalez Fernandez via Getty Images
Identity theft insurance is pretty affordable.
The relatively small cost of identity theft insurance might make it worthwhile, even if you’re unsure whether you need it.
Franklin Manchester, a 20-year insurance industry veteran and global insurance advisor at SAS, a global data and AI solutions provider, said that if you buy identity theft insurance as an endorsement, or rider, on your homeowners or renters policy, it’s usually about $50 per year. If you buy it as a standalone policy, it might be a little more, Manchester said.
Coverage is typically about $25,000, Manchester said. That coverage may not seem like a lot, he admitted. Still, it would come in handy if you would otherwise spend $25,000 trying to get your identity restored. Manchester thinks it’s a good deal.
“The cost-benefit alone for the recovery services is worth the $50. No question,” Manchester said. “Navigating recovering your identity after it’s been stolen will be difficult. Having an insurance company as your ally can make that process at least more manageable.”
He added: “Consumers ― especially retirees who might be more susceptible to ID theft and have more to lose in their retirement accounts ― should always buy this protection.”
Identity theft insurance often will try to prevent your identity from being stolen in the first place.
Many identity theft insurance policies offer tools to keep your identity safe, said Michael Fernez, an information security analyst at Adelphi University.
“Some of the typical features include things like dark web monitoring, credit monitoring and fraud alerts,” Fernez said, though he advises you learn about the specific policy you’re purchasing.
Dark web monitoring involves searching the dark web, a part of the internet that is hidden from most members of the public and happens to be a place where criminals often go and trade stolen data (such as, perhaps, your Social Security number or checking account information). Credit monitoring is a service where the insurer looks to see if any suspicious things have happened in your credit history lately, such as a stranger buying a new car in your name. The insurer might put in place fraud alerts that require lenders to verify your identity before approving new credit in your name.
Still, it’s important to remember what identity theft insurance can and can’t do, said Steve Weisman, a practicing lawyer and senior lecturer in law at Bentley University in Waltham, Massachusetts.
“I liken the role of identity theft insurance to a man stepping off the curb into the street and suddenly getting hit by a bus, at which time someone rushes up to him, leans over the man lying in the street and tells him, ‘You just got hit by a bus,’” Weisman said. “Identity theft insurance may let you know that you are a victim of identity theft, but it can’t prevent identity theft.”
The best way to stop identity theft, Weisman said, is to “freeze your credit — and people can easily do this on their own for free at each of the three major credit reporting bureaus.”
But Weisman did say, “It is indeed a hassle to straighten out your identity after becoming a victim of identity theft, and these services may be of particular use to older people.”
If you file, that is. That brings up another interesting issue that happens with many insurance claims. Tortorici said that, in her 16 years in the insurance industry, “I haven’t personally handled a claim of this type,” referring to identity theft claims.
“In my experience, many people try to resolve identity theft issues directly with their credit card companies or banks first before involving their insurance carrier. Others may hesitate to submit a claim if they’re concerned about losing a claims-free discount on their homeowners policy,” Tortorici said.
Still, if you had a nightmarish scenario where your identity was stolen and you were looking at thousands of dollars lost and untold amounts of time to reclaim your good name, being able to file a claim with your identity theft policy could end up looking like a genius move on your part.