How FDIC Insurance Works

Now is the time to examine your bank accounts to make sure that you
remain under the insurance limits, especially if you have multiple
accounts in one bank. Here's how the insurance works, using excerpts
from the FDIC Web site, where you can read the details.

Single Accounts: These are deposit accounts owned by one person and
titled in that person's name only. All of your single accounts at the
same insured bank are added together and the total is insured up to
$100,000. For example, if you have a checking account and a CD at the
same insured bank, and both accounts are in your name only, the two
accounts are added together and the total is insured up to $100,000.

Note: this category does not include retirement accounts, such as IRAs
and Keogh accounts.
Those accounts have a separate $250,000 insurance limit -- and that
limit is based on the total of all retirement accounts for that person
added together. (You cannot increase that insurance amount by adding
different beneficiaries for the retirement accounts.)

Joint Accounts: These are deposit accounts owned by two or more people.
If both owners have equal rights to withdraw money from a joint account,
each person's shares of all joint accounts at the same insured bank are
added together, and the total is insured up to $100,000.

If a couple has a joint checking account and a joint savings account at
the same insured bank, each co-owner's shares of the two accounts are
added together and insured up to $100,000, providing up to $200,000 in
coverage for the couple's joint accounts.

Under FDIC rules, each person's share of each joint account is
considered equal unless otherwise stated in the bank's records.

Revocable Living Trusts: These are formal revocable trusts created for
estate planning purposes. The owner of a living trust controls the
deposits in the trust during his or her lifetime.

Deposit insurance coverage for revocable trust accounts is based on each
owner's trust relationship with each qualifying beneficiary. While the
trust owner is the insured party, coverage is provided for the interests
of each beneficiary in the account. The FDIC insures the interests of
each beneficiary up to $100,000 for each owner, subject to certain
restrictions on how the account is titled and who is named as
beneficiary.

Coverage is provided for the interest of each qualifying beneficiary
named by each owner. Additional coverage is not provided to the owners
for naming themselves as owners.

Note: There are complex exceptions to this rule for certain trusts, so
if you are planning to keep large amounts on deposit for a trust, you
should speak with a bank officer to confirm your deposit insurance.

What Should You Do Now?

1. Make Sure Your Bank Accounts are Insured Deposits!
Banks offer many types of investments these days, and some of those look
like insured deposits, but may not be. Now is the time to make sure that
products purchased inside your bank are actually insured deposit
accounts. Ask that question directly, and ask your banker to show you
the language of your account agreement that confirms the deposit
insurance.

2. Check Your Insurance Limits
If you have amounts above $100,000 in your bank, you may want to move
money by wire transfer to another insured deposit institution. That
could mean having the interest earned on your jumbo CD sent to you each
month, instead of accruing to your account. Don't forget that balances
in your checking account will be added to your other deposit accounts.

3. Use Alternative, Safe Investments
You can purchase Treasury bills, the world's safest and most liquid
investments, directly from the government. The minimum investment is now
only $100, but you can purchase much larger amounts, in effect getting
the government's IOU for money that is far above the deposit insurance
limits.

The process of buying Treasuries online is simple, and transactions are
done by direct debit from your bank account. Interest is automatically
paid out to your bank account. For larger investments, you can stagger
maturity dates. Plan to hold those securities to maturity -- typically
13 or 26 weeks -- before getting access to your money by having it
deposited to your bank account.

Bottom Line: You can sleep well with "money in the bank," but only if
you know the FDIC-insurance status of those funds.

If you've been smart or lucky enough to accumulate savings above the
insured limits, you should take the time to evaluate your banking
situation and take appropriate steps to give your money maximum safety.