You Get a Large Windfall: How Can It All Be FDIC-Insured?
FDIC Insured Coverage
The FDIC frequently gets inquiries from people who, because of a recent development (perhaps an inheritance, a home sale, or a big payment from a pension or insurance claim) have a large sum of money they want to have fully protected by FDIC insurance. "They are often surprised to learn there are ways they can deposit much more than $100,000 at one bank and have all of it insured by the FDIC," said Kathleen Nagle, chief of the agency's Deposit Insurance Section.
In general, to maximize your FDIC insurance coverage at one bank, you can deposit funds in different "ownership categories" (such as single accounts, joint accounts and certain trust accounts). Because each category is separately insured, that enables you to go beyond the basic deposit insurance coverage of $100,000. Also, payable-on-death accounts (which state who will get the funds upon your death) may get extra coverage based on how many qualified family members are named as beneficiaries.
However, before structuring accounts just to maximize insurance coverage, the FDIC has some warnings. "First, remember that if you add someone as a co-owner to an account just to maximize your insurance coverage, this other person will have as much right to withdraw the money as you do," Nagle said. "Second, only name beneficiaries to a payable-on-death account if you truly want that person to get the money if you die. Third, make sure you meet any FDIC requirements for obtaining coverage in the different ownership categories."