When Banks and Insurance Companies Become Unstable Places for Your Money
In these unstable times, plenty of people are worried about their savings in various bank accounts and insurance policies, so it’s worth getting some expert tips about what’s safe where.
Savings you have in a bank: The key thing here is the rules of what is covered by FDIC deposit insurance. The minimum that is covered in a savings account, per person, is $100,000. If you have a joint account with your spouse, that means $200,000. And that’s per bank. Additionally, if you have a “proper” retirement savings account (that is, an IRA or SEP, for example) then it is covered up to $250,000 per person.
Mutual funds or other investments that you buy through a bank get a bit more complicated. If your bank goes under, what you get for your mutual funds would be connected to their underlying value rather than any specific limit. But a money-market account investment through a bank is covered again by the FDIC deposit insurance rules.
Your finances and insurance companies: If an insurance company goes bankrupt, there are state guaranty associations which provide the financial back-up, rather than a federal arrangement as with banks. When the assets of the insurance company aren’t enough to pay out all the policies, then the state guaranty associations step in and pay up to certain limits, which vary between states.
This entry was posted on Monday, October 13th, 2008 at 3:54 am and is filed under Banks and Banking. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
