We're pleased to say that our Fall 2001 edition of FDIC Consumer News—a special report explaining why and how people should make sure all their funds are fully protected—is making a difference. Several thousand consumers called or wrote the FDIC with questions about their insurance coverage. "Most of the consumers had over $100,000 at their bank, and for the large majority, we were able to confirm that their accounts were fully insured," says Kathleen Nagle, a supervisor with the FDIC's consumer affairs division. "But some people had uninsured funds and didn't realize it, and we're happy that we could help them bring all their deposits within the FDIC insurance limits."

As part of our ongoing effort to help you understand your FDIC insurance coverage, here are some recent questions from consumers (and our answers), plus details on how to get more information.

My husband and I set up a revocable living trust to pass money to our three children when we die. To fund the living trust account, we closed a payable-on-death (POD) account. Is our insurance coverage the same?

Probably not. POD accounts are pretty straightforward—they usually just include a line stating that the money is payable on death to certain people or is in trust for them. Under the FDIC's rules for POD accounts, each owner's share can be insured up to $100,000 per beneficiary if the beneficiary is the owner's spouse, child, grandchild, parent or sibling. If two parents have one POD account naming their three children as beneficiaries, the account could be insured for up to $600,000.

But because a typical living trust document imposes conditions—perhaps a requirement that a child graduate from college before a certain age or forfeit the right to the trust funds—the money may not be considered payable on death. Instead, the trust likely would be insured as the grantor's individual funds up to a maximum of $100,000. So, if a husband and wife establish a revocable living trust with conditions for their three children, the FDIC probably would treat the account as two single-ownership accounts with insurance limited to $200,000 ($100,000 for each owner), not $600,000 as with a POD account. "If you have a deposit account in the name of a living trust, you should assume that it will be added together with any other accounts in your name and insured only up to $100,000," says FDIC attorney Christopher Hencke.

I have two Individual Retirement Accounts at a bank. Is each IRA separately insured to $100,000? Also, if I add beneficiaries, can I increase my insurance coverage?

All your retirement funds at a bank (except for Education IRAs) are added together and insured up to $100,000, separate from any non-retirement funds you have at the bank. "You cannot increase the coverage of your IRA by dividing the money among multiple IRAs or by adding beneficiaries," says Kate Spears, a deposit insurance specialist in the FDIC's consumer affairs division.

I intend to briefly have money in the bank well over the $100,000 insurance limit. How can I make sure that bank is healthy?

For Help With Your Insurance Coverage

Among your options: You can call us toll-free to speak with an FDIC insurance expert or request copies of FDIC publications such as "Your Insured Deposits" and the quarterly FDIC Consumer News (including the Fall 2001 special report we told you about above). Or, you can go to the FDIC Web site to e-mail your questions to us, read our publications or even use an online insurance estimator called EDIE. For details about how to contact us, see "For More Information."

Most people don't need to worry about their bank's financial condition if their funds are deposited in an FDIC-insured institution and are within the $100,000 insurance limit. But if you choose to deposit more than the $100,000 limit, you have several options for learning more about the health of an institution (although you should know that predicting when or if a bank will fail is tricky business). Financial data for each federally-insured bank and savings institution can be obtained free of charge using the "Institution Directory" service on the FDIC's Web site. But because the average person may have difficulty understanding this financial information, the FDIC makes available a list of private companies that provide their ratings and analyses of individual banks and savings institutions, usually for a fee.