7 Things Seniors (and Everyone Else) Should Know About FDIC Insurance
FDIC Insurance is the only kind of insurance that you can get when you put your money in a bank. Other types of financial institutions will have other options for insurance.
FDIC stands for Federal Deposit Insurance Corporation and it is a type of insurances that guarantees your deposits if the institution fails to meet reserve requirements or any other requirements. The FDIC insures deposits above a certain amount of money.
Since the 2008 financial recession, many people's lifestyles have been greatly changed and there are now more people living on fixed incomes. Many senior citizens are finding it difficult to meet their daily expenses let alone save for retirement. People at this age have traditionally had a greater need for life insurance and their lives often become more fragile because of illness or injury. However, as life insurance can be expensive, most seniors turn to savings accounts to supplement any life insurance that they may be carrying for themselves or their families.
It's important to note that you can't take your money out of the bank even if you have FDIC insurance on those funds. The bank must be completely insolvent before you can get your money back from the government. This means that if the bank is shut down, even if they have the money, they can't give it back to you because it is technically a crime to operate a bank without an FDIC license.
The FDIC also has an insurance limit that varies from one account type to another and differs among financial institutions as well. The most common FDIC insurance amounts are currently $250,000 per depositor per institution for accounts that are held in single ownership and $250,000 for joint ownership. It's important to note that these amounts do not include any separately insured deposits such as retirement accounts or individual life insurance policies.
If you have a joint account with your spouse, and one of them passes away, the entire amount goes into a standard account, and the limit is now $250,000 per depositor. If there is more than one owner on an account, each individual owner must separately meet the $250k limit. For example, if two parents have an account with their child as joint owners and they pass away, depending on their will or trust agreement, that money can go into a special trust for the benefit of the minor child (in which case that $250k would be allocated to that trustee). This is why it's important for you to know who has access to your money.
You can have an "Irrevocable" trust set up for different situations, such as when you want your account to provide support for someone else, or you want to keep your money out of the hands of a potential creditor in order to protect it from being taken away. You can set up an irrevocable trust and give beneficiaries access to the funds so that they may use them for whatever they need. You are not allowed to take back this money without going through legal channels after the trust has been fully funded.
When filling out forms regarding finances, it's important to know what each question is asking because the answer will determine if your insurance coverage will be affected or not by your answers.
Most people don't realize that you can also put an entire life insurance policy into a trust if you desire. This is beneficial because it keeps the money from being subject to estate taxes or probate fees that may be required upon death of the insured individual.
It's important to understand how FDIC insurance works because it's not just for older individuals. Even if you are young, your parents may be thinking about placing their funds in a savings account for your college education. You should know what kind of insurance is on those funds in case there is ever an issue with the institution holding them. You want to know your options and how to protect yourself in case something does go wrong with your bank, financial institution or credit union.
If you are in the market for life insurance, there are a lot of things to consider. You should be aware of your options and work with an agent you can trust. If you are unsure whether or not life insurance is a good option for you, or if you're confused by all the options available to you, talk to someone who can help you make a decision that's best for your situation and actuarially sound for your needs.
The most important thing is that you make sure all your bases are covered.
Article Source: http://EzineArticles.com/?expert=Kathy_Molloy
About the author:
Kathy Molloy is a Certified Financial Planner with her own financial planning firm in Beverly Hills, California. She guides her clients through the financial maze by using her knowledge of financial products and risk management to help them achieve their goals. She covers all the basics including retirement planning, estate planning, tax planning, asset protection and insurance...learn more about Kathy Molloy
Article Source: http://EzineArticles.com/?expert=Kathy_Molloy
Banks are not only places where you can earn money but they also serve as investment vehicles for your future. One of the best ways to invest, is to put your money in one of the many forms of life insurance. Banks and life insurance companies are constantly competing to provide the best interest rate for a policy and it's important that you research this area before investing. You want to be sure that you're getting a good return on your investment through an interest rate that is competitive with what other institutions are offering in your local market, while maintaining sound insurance coverages as well.
Life insurance can be split into two different categories: term and permanent life insurance. Term insurance is kind of like a savings account where you place money in your account and it grows on its own over the years. It's the perfect investment vehicle for people who want to reach towards a retirement goal but don't have the cash flow to set aside money in cash. The interest rates on these policies can be very high, so if your need for a little extra income outweighs the risk of losing money, you may want to consider term life insurance instead.
Permanent life insurance is when you invest the death benefit that your policy provides. This becomes one of your main investment vehicles and it gives you ongoing returns every month for as long as you are alive.