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Increase Your FDIC Coverage – How?

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Increase Your FDIC Coverage – How?

FDIC insurance is a significant benefit for all depositors that have funds at an FDIC-insured bank, such as Peoples Bank. The FDIC, which stands for Federal Deposit Insurance Corporation, is an independent agency of the United States government. Its purpose is to protect depositors of insured United States banks in the unlikely event of a bank failure.  Since the FDIC began operation in 1934, no depositor has ever lost a penny of FDIC-insured deposits.   

FDIC Insurance Basics 

The FDIC can securely insure deposits by examining and supervising financial institutions for safety, soundness, and consumer protection. FDIC insurance covers depositors’ accounts at each insured bank, for each account ownership category, dollar for dollar, up to the insurance limit of $250,000. The exciting news is that you can increase this insured amount by using multiple ownership categories. Keep reading to learn how. 

What The FDIC Does and Does Not Cover 

FDIC insurance covers all types of funds deposited at an insured bank but does not cover investments, even if they are purchased at an insured bank.   

FDIC Insurance covers:  

  • Checking Accounts 

  • Savings Accounts 

  • Money Market Deposit Accounts 

  • Time Deposits such as Certificates of Deposit  

  • Cashier’s Checks 

  • Money Orders 

  • Negotiable Order of Withdrawal (NOW) Accounts 

FDIC Insurance DOES NOT cover:  

  • Stocks 

  • Bonds 

  • Annuities 

  • Municipal Securities 

  • Mutual Funds 

  • Life Insurance Policies 

  • Safe Deposit Boxes and their contents 

  • US Treasury Bills, Notes, or Bonds 

Maximize Your FDIC Coverage with Ownership Categories 

While the $250,000 FDIC insurance limit is per depositor, per insured bank, the FDIC provides separate insurance coverage for funds depositors may have in different categories of legal ownership. This means that a simple way to maximize FDIC coverage is to open multiple accounts at the same bank in different ownership categories.  

The ownership categories recognized by the FDIC are: 

  • Single Accounts 

  • Employee Benefit Accounts 

  • Certain Retirement Accounts 

  • Revocable Trust Accounts 

  • Irrevocable Trust Accounts 

  • Corporation, Partnership, or Unincorporated Association Accounts  

  • Government Accounts 

To understand what this means, it’s best to look at a simple example: 

Let’s say you are married.  You and your spouse each can open individual accounts at a single bank, resulting in each of you having up to $250,000 of FDIC insurance. Since you get $250,000 in coverage for each ownership category, this means you can also open a joint account, each having $250,000 insured in that account. Between your three accounts, you could have $1 million FDIC insured at one bank.  Since IRAs and certain retirement accounts are also covered at $250,000 per owner, this married couple could increase their FDIC coverage further to $1.5 million at one bank.* 

Frequently Asked Questions                                    

Q: How can I get deposit insurance? 

A: Depositors don’t need to apply for or purchase FDIC deposit insurance. Coverage is automatic whenever a deposit account is opened at an FDIC-insured bank. 

Q: How do I find out if a bank is FDIC insured? 

A: You can ask a bank representative, look for the FDIC sign at your bank, or you can use the FDIC's BankFind tool.  

Q: What about my deposits at other insured banks?? 

A: The FDIC insures deposits that a person holds in one FDIC insured bank separately from their deposits in another separately chartered FDIC insured bank.  Funds deposited in separate branches of the same insured bank are not separately insured, but separately chartered insured banks are. 

The FDIC: Electronic Deposit Insurance Estimator (EDIE) can be a valuable resource to calculate your personal FDIC insurance coverage. As a local community bank, Peoples Bank remains safe, solid, and well capitalized. As our valued customer, you have access to our experienced team. We stand ready to assist you with any of your FDIC coverage questions. Call or stop by anytime! 

*These deposit insurance coverage limits refer to the total of all deposits that account owners have at each FDIC-insured bank. The example above shows only the most common ownership categories that apply to individual and family deposits and assume that all FDIC requirements are met.