There's no denying it - protecting your identity is important. It is very important. But exactly what type of identity theft protection is necessary for you specifically? And should you pay for that protection?

The answer to those questions vary from person to person and situation to situation, as do most questions related to personal finance. What depth of identity theft protection you need depends on what is happening in your life currently, what happened in the recent past, and what may be happening in the near future.

Reasons to consider signing up for an identity theft protection or prevention service:

• If you know or have reason to believe that your personal information has been compromised. This could be due to a wide number of factors, such as lost or stolen personal items.
• If you plan to apply for a mortgage, credit card, or other loan in the near future. No matter how you go about obtaining this new loan or line of credit, it is a good idea to keep an eye on your credit profile during these times.
• If you recently moved or will be moving. The process of moving involves changing addresses associated with current accounts and opening or transferring bank accounts, insurance accounts, etc.

There are a lot of reasons to consider signing up for an identity theft protection service — many more than those listed above. But, unless your personal information has already been compromised, it may be difficult to determine whether enrolling in this type of service is really necessary. Dissecting the typical identity protection service and what it offers can help to clear up any uncertainty.

Identity protection and prevention services typically incorporate some, if not all, of the following benefits into their suite of services:

• Credit monitoring of your profile on a daily basis
• Enabling of fraud alerts with the major credit bureaus
• Listing of credit applications submitted in your name
• Removal from junk mail lists (i.e. pre-approved offers for credit)
• Various levels of identity monitoring (i.e. address changes)

Opponents of identity protection services argue that a lot of the benefits offered can be done for free by individuals themselves. Proponents of identity protection services say that these services make certain that all steps are done correctly, and also offer a one-stop source with continuous credit and identity monitoring.

What you can do on your own (for free) to help protect yourself from identity theft:

• Request to stop receiving unsolicted credit offers in the mail by Opting out of receiving pre-approved offers of credit
• Request free copies of your credit report guaranteed to you under the Fair Credit Reporting Act.
• Be frugal about giving out your personal information. Avoid giving out information to telemarketers and through email whenever possible.
• Opt out of having your information "shared with partners" with your current accounts. This type of practice is usually spelled out in privacy policies for your loans, credit cards, etc.

Although, as seen above, there is much that you can do on your own to help protect your identity and prevent identity theft, signing up for a service that specializes in these practices can be beneficial in many instances. How important is protecting your identity? The answer to that question is easy to predict. Are you willing to pay to protect your identity? The answer to that question is harder to predict.

Understanding what identity theft protection services have to offer and also how vulnerable you are to identity theft at any given time can make make the decision that much easier.