Deposit insurance

What it means

Bank deposits are insured by the Federal Deposit Insurance Corporation and credit union deposits by the National Credit Union Administration, up to a limit per depositor, per institution, per ownership category.

Payable-on-death accounts and joint accounts are separate ownership categories, which is why a family can hold more than the headline limit at one bank and still be fully covered.

After a death, the accounts of the person who died continue to be insured as though they were alive for a period, so that the estate is not forced to move money quickly.

Why it matters

It matters most where an estate holds a large balance at one institution during administration — proceeds of a house sale waiting to be distributed, for example.

The grace period after a death is the part nobody knows about, and it removes a decision an executor would otherwise have to make in the first weeks.

When you are likely to meet it

• When an estate account holds a large balance.
• When consolidating a parent's accounts.
• When deciding where sale proceeds should sit during administration.

Related terms

• Beneficiary designationA named person on an account or policy who receives it directly on death, without it passing through the will or probate.
• EstateEverything the person owned at the moment they died, treated as one thing that has to be settled.
• Estate accountA bank account in the estate's own name. Estate money must not pass through anybody's personal account.
• Fiduciary dutyThe obligation to act for somebody else's benefit rather than your own — and to be able to show you did.
• Non-probate assetSomething that passes to a new owner automatically, without a court.
• Payable on death (POD)A bank-account instruction that pays the balance to a named person on the owner's death.
• Retained asset accountAn account an insurer opens in the beneficiary's name instead of sending a check, holding the life insurance proceeds until they are drawn.
• SIPCThe scheme that returns customers' securities if a brokerage fails. It does not cover losses in the market.

Official sources

The authority this page describes, at the agency that publishes it. Sahvelo does not restate a rule from a secondary source.

• FDIC — deposit insurance (opens in a new tab)

Sahvelo guidance that uses this

• Bank accounts after a death