Consumerism Commentary - Latest Comments in What is Protected By the FDIC

Re: What is Protected By the FDIC

Harlan Landes — Thu, 21 Aug 2008 17:09:55 -0000

pfstock: I've updated the article above to ignore BankRate's claim of a maximum. You're right, the FDIC is the ultimate source. Anyone with questions should always head in that direction. I will be interested to see if BankRate corrects their published information.

Re: What is Protected By the FDIC

pfstock — Thu, 21 Aug 2008 16:53:58 -0000

Thank you for your response, and for your Email. Actually, Bankrate's statement is an oversimplification. I will contact them about their oversight, and have published a post that covers these issues in greater detail:

http://pfstock.blogspot.com...

The FDIC example is for a married couple with three children. In this case, the FDIC insurance limit for this type of testamentary account is indeed $600,000. However, the limit would vary based on the number of account owners and number of qualifying beneficiaries, so it isn't correct to make a broad generalization here.

A qualifying beneficiary is required to setup such an account. However, testamentary accounts are titled in this form: "Owner POD (payable on death to) Child". Bankrate's article implies that the failure of a bank means that the money is automatically transferred to the the beneficiary (child in this case) when the FDIC insurance kicks in. Your statement was "the insurance applies to the beneficiary, not the owner." This is not true as the titling stipulates that the transfer only occurs after the death of the owner(s).

Lastly, I think that readers who have a serious concern here should check with the FDIC to find out their own coverage, as everybody's personal situation is different. This is a link to the FDIC's Electronic Deposit Estimator which will help determine one's coverage:

http://www.fdic.gov/edie/

I encourage readers to run their personal scenario through this calculator to be sure they are covered.

Re: What is Protected By the FDIC

L G — Wed, 20 Aug 2008 13:11:55 -0000

Are accounts with two benefifiaries insured for 200,000 dollars?

Re: What is Protected By the FDIC

Harlan Landes — Wed, 13 Aug 2008 22:37:58 -0000

pfstock: The FDIC website has information on coverage trusts including a number of examples, and BankRate also provides some information, with a definitive claim on the $600,000 limit. Is BankRate incorrect about this limit? By the way, technically, the insurance applies to the beneficiary, not the owner.

Re: What is Protected By the FDIC

pfstock — Wed, 13 Aug 2008 20:49:14 -0000

Hi Flexo: I have a statement and a question for you. You said that "Couples can also set up a trust for children or another relative, insured by the FDIC up to $600,000."

My statement is that your term "another relative" is vague. The FDIC has very specific rules on who can qualify as a beneficiary. For example, a grandchild, parent, or sibling can qualify. However, nieces, nephews, in-laws, or domestic partners would not qualify. I advise that readers should check with the FDIC for the specifics on who can be named as a beneficiary.

My question is how did you come up with the $600,000 number? I've read through much of the FDIC material, and didn't see this mentioned. Could you cite a specific example?

Thanks.

Re: What is Protected By the FDIC

Keith — Tue, 22 Jul 2008 23:37:34 -0000

If the entire banking system collapses, I don't think that "cash on hand" is going to do you much good anymore.