Lifepoint Financial Design – LifePoint Financial Services – Mike Metzger Financial Planning

Amidst the recent fallout of SVB Bank and others, concern has turned towards the safety of your money. And rightfully so. But, the news coverage hasn’t really done a great job explaining what FDIC insurance is and how you can maximize that coverage at your bank and investment institutions.

The Federal Deposit Insurance Corporation (FDIC) is an independent U.S. government agency that provides deposit insurance to protect depositors in case a participating bank or savings institution fails. FDIC insurance covers all types of deposit accounts, including checking accounts, savings accounts, money market accounts, and even certificates of deposit (CDs), up to a certain amount.

On the other hand, the Securities Investor Protection Corporation (SIPC) provides protection to investors against the loss of cash and securities held by a broker-dealer. SIPC is also an independent U.S. government agency that insures customers up to $500,000 in the event that a broker-dealer fails.

Both FDIC and SIPC insurance provide an essential safety net to investors and depositors. However, there are ways to maximize coverage and ensure you are fully protected.

Firstly, for FDIC insurance, it is important to note that the insurance coverage limit for each depositor is $250,000 per owned account per bank. If you have more than $250,000 at one bank, you should consider opening more than one account to keep deposits under the limit.

When it comes to accounts and FDIC insurance, there are a variety of capacity types that are important to understand.

  • A single account is an account in the name of one person and is insured up to $250,000 by the FDIC.

  • Joint accounts are another capacity type where two or more people own the account and the deposit is insured up to $250,000 per account holder.

  • Another capacity type is revocable trust accounts, which can provide a way to distribute assets upon death. These accounts are insured up to $250,000 for each beneficial owner, subject to specific requirements.

  • There are also other capacity types, such as irrevocable trust accounts, employee-benefit plan accounts, and government accounts, each with its own rules and regulations for FDIC insurance coverage.

Moreover, it is important to know that not all financial products are FDIC-insured. For example, mutual funds, stocks, bonds, and annuities are not FDIC-insured. Therefore, before investing your money, it is essential to research the offering and determine if it is insured by FDIC or not.

For SIPC insurance, the coverage limit is $500,000 per customer, including $250,000 for claims of cash balances. In case of investment loss, SIPC works to return customers’ missing securities and funds held by a failing or bankrupt broker-dealer. Similar to FDIC insurance, it’s also covered per capacity type and can be maximized in the same manner by single, joint, and trust accounts.

Lastly, it is important to review and evaluate your accounts regularly, especially when your financial situation changes or your accounts evolve. You should also keep track of the accounts with the different accounts or institutions you use to ensure you are always within coverage limits.

FDIC and SIPC insurances provide necessary protection to depositors and investors. However, maximizing coverage benefits require attention to details, system planning, and understanding your insurance benefits in the different financial products you own. It is essential to keep track of your investments and evaluate your accounts regularly to ensure you are always fully protected.

As always, I’m here to help answer any questions!


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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