These Articles HT201472 and HT201365 from Apple clearly explain what you can do to in case your phone is lost or stolen.
To Answer all of your questions:
Yes there is a way to prevent anybody from using your phone. When the phone gets stolen you put your device in lost mode as explained in the articles above. No one will be able to re-use / re-active your phone without your Apple ID and password because of the Activation Lock that is enabled when you put the device in lost mode.
With Activation Lock, your Apple ID and password is required before anyone can:
- Turn off Find My iPhone on your device
- Erase your device
- Reactivate and use your device
To put your device in lost mode:
From any iPhone, iPad, or iPod touch, log into the Find My iPhone app using your Apple ID. You don’t have to log in Find My iPhone from a device that you own (ie. it could be a friend’s device), but you must login using the same Apple ID/password as the device you are trying to put into Lost Mode.
Once logged in, Find My iPhone will show a map and a list of devices that are linked to your Apple ID. Tap on the device you have lost or that was stolen to select it.
Tap on the “Actions” button at the bottom of the screen, then tap on “Lost Mode.”
You will be asked to confirm you want to turn Lost Mode on. Tap on “Turn On Lost Mode…” to continue.
If the device you are trying to put in Lost Mode doesn’t have a passcode, Find My iPhone will require you to set one up on the spot. Type in a passcode and type the new passcode again to confirm. If you already have a passcode enabled on the device, then you can go straight to the next step.
You will now have the option of entering a phone number where you can be reached. This phone number will be displayed on the Lock screen of your device. Although optional, it is highly recommended you add your phone number so people can reach you if they find your device. Tap “Next” when done.
Finally, you can enter a message to display on the Lock screen along with your phone number. By default, the message is “This iPhone has been lost. Please call me.” but you can customize it the way you want. Tap “Done” in the upper right corner to activate Lost Mode.
If someone tries to plug your iPhone in iTunes to restore it, they won’t be able to and they will see the following message, asking them to first turn off Find My iPhone.