Listen to Lawrence – FDIC Protection Explanation – Part 2

June 22, 2020

Dear clients and friends,

My last installment of LISTEN TO LAWRENCE was about the $250,000 FDIC insurance that you have at each bank for your checking accounts, savings accounts, CDs and money markets. I quickly learned that this was a topic you were VERY interested in because I immediately received a ton of responses wanting to know more. Therefore, I have decided to spend a couple of weeks on this topic to really flush it out and deliver the knowledge to you in bite-size, digestible pieces. Let’s call my last email, FDIC PART ONE, and we will go from there.


Let’s start with some cool facts. The $250,000 insurance coverage is available to any person or entity and it is not required that the person has to be a U.S. citizen or resident. It is backed by the full faith and credit of the United States government, so please keep paying your taxes. By the way, the program began in 1934 as a response to the Great Depression, and no depositor has ever lost a penny of FDIC-insured deposits. However, the insurance only protects your cash deposits , not other investments you make at the bank.

We know the basic rule; there is $250,000 of insurance for each depositor, per insured bank. This means a husband and wife could have $500,000 insured in one joint account because of the per depositor rule. This also means we could have $250,000 in each of four insured banks and all $1,000,000 would be insured because of the per insured bank rule. On the other hand, $250,000 deposited in four branches of the same bank gets you only $250,000 of insurance.

THE BOTTOM LINE, if you want to play it safe, make sure that you never have more than $250,000 in any insured bank. But there is a way you can have more!

You can have more than $250,000 in one insured bank because there is another rule: you get $250,000 of insurance per depositor, per bank AND PER ACCOUNT OWNERSHIP CATEGORY . This means you are entitled to more than $250,000 of insurance protection if your money is spread out among different categories of legal ownership. In theory, if there are eight (8) categories, you can have $2 million worth of insurance protection at one bank (8 x $250,000).

Ownership Categories

The following are the ownership categories:


I will be discussing these categories in a series of future emails where I will describe the requirements a depositor must meet to qualify for insurance coverage above $250,000 at one insured bank.

I hope this helps.

Please forward this email to your friends and relatives.

As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected.


Stay safe!