Identity theft.

Two scary words we've all heard and hope we never have to deal with. According to the Federal Trade Commission, 8.3 million Americans adults, or 3.7 percent of the population, were victims of identity theft in 2005.

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As identity thefts have increased over the years, so have Americans' awareness of it and businesses that advertise identity theft protection. But does the average American need identity theft protection? Is it worth the cost, and will it keep you safer?

One of the best benefits an ID protection service offers is that if your identity is compromised, many monitoring services have representatives that will walk you through the process.

"Their resolution services are very hands-on. Because if you are a victim of identity theft the real headache is the time and frustration dealing with all those institutions getting your records cleaned up," said Even Hendricks, publisher of Privacy Times, a newsletter based in Washington D.C.

Hendricks recommended the Federal Trade Commission, the Privacy Rights Clearinghouse and the Identity Theft Resource Center as places people can go for help.

"But they can only do so much. They can't really take over your case and make sure it's handled," added Hendricks, who owns stock in ID Watchdog, an ID protection service.

There are many Web sites that offer identity theft protection for a small monthly or annual fee and most of the major banks and credit cards like American Express, Chase, Discover and Citi have jumped into the game and now offer ID protection.

One Web site that offers identity theft protection is LifeLock. For the cost of $110 a year or $10 a month, LifeLock offers several forms of ID protection.

LifeLock will request fraud alerts from the three major credit agencies on your behalf. This means no new lines of credit can be opened in your name without you first being contacted by the bank or lender.

LifeLock will also make sure you are mailed a copy of your credit report from all three major credit agencies every year, and you will be removed from junk mail and pre-approved credit card mailing lists, which is how some ID thieves get your personal information.

If your wallet is lost or stolen, LifeLock will help you contact the affected credit card, bank or document issuing company, cancel those accounts and complete the paperwork and steps necessary to replace your lost documents.

So, all of this sounds great, but is it worth $110? Other sites offer various legal services that cost $35 a month or $420 a year.

ID Watchdog costs $19.95 per month and says on its Web site, "Once a month we will scour databases across the country in search of any changes that may have taken place on your identity over the last month. If any changes take place we will notify you immediately and one of our identity theft resolution specialist will work with you to resolve any issues. That's a 100% protection guarantee!!"

OK, but $240 a year is a lot of money to some people, and over the course of several years that could cost thousands of dollars, especially if you are also getting protection for your spouse and children.

The truth is, most of the benefits that ID protection services offer can all be done on your own, and for a much less cost. The question is, do you want to take the time and energy it takes to save the money?

By contacting the credit reporting agencies, you can put a freeze on your credit for a cost of $10.

Any time you want to open a new line of credit, the freeze can be lifted for a cost of $10. Since the average American probably doesn't open up new lines of credit more than a few times a year, if at all, this will cost much less than $100 to $420 a year.

Everyone is entitled to a free credit report once a year and it can be obtained at www.annualcreditreport.com. By staggering your orders from the three credit reporting agencies, you can see one every three months.

By calling 1-888-5OPTOUT (888-567-8688) you can stop the pre-approved credit offers. You also can opt out online at www.optoutprescreen.com You can choose whether to opt out for five years or permanently.

Of course, all of this takes a lot of time, and time is money, as they say.

"The problem is most people aren't either disciplined or capable of protecting themselves," said Robert Siciliano, CEO of www.IDTheftSecurity.com "The administrative processes involved in making the phone calls and sending the e-mails and writing the letters unfortunately for many people is beyond their capacity or it's an inconvenience for them that they would rather not be involved in."