http://pfstock.blogspot.com/2008/08/caution-fdic-misinformation-is-rampant.html

The FDIC example is for a married couple with three children. In this case, the FDIC insurance limit for this type of testamentary account is indeed $600,000. However, the limit would vary based on the number of account owners and number of qualifying beneficiaries, so it isn’t correct to make a broad generalization here.

A qualifying beneficiary is required to setup such an account. However, testamentary accounts are titled in this form: “Owner POD (payable on death to) Child”. Bankrate’s article implies that the failure of a bank means that the money is automatically transferred to the the beneficiary (child in this case) when the FDIC insurance kicks in. Your statement was “the insurance applies to the beneficiary, not the owner.” This is not true as the titling stipulates that the transfer only occurs after the death of the owner(s).

Lastly, I think that readers who have a serious concern here should check with the FDIC to find out their own coverage, as everybody’s personal situation is different. This is a link to the FDIC’s Electronic Deposit Estimator which will help determine one’s coverage:

http://www.fdic.gov/edie/

I encourage readers to run their personal scenario through this calculator to be sure they are covered.

My statement is that your term “another relative” is vague. The FDIC has very specific rules on who can qualify as a beneficiary. For example, a grandchild, parent, or sibling can qualify. However, nieces, nephews, in-laws, or domestic partners would not qualify. I advise that readers should check with the FDIC for the specifics on who can be named as a beneficiary.

My question is how did you come up with the $600,000 number? I’ve read through much of the FDIC material, and didn’t see this mentioned. Could you cite a specific example?

Thanks.