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CIT Group Failure Highlights Insurance

Checking accounts (including money market deposit accounts, which aren't the same as money market mutual funds), savings accounts, certificates of deposit (CDs) and retirement accounts are eligible for FDIC protection.

Investment-grade products purchased from a bank isn't entitled to the same protection. Mutual funds, annuities, stocks, bonds and Treasury securities are usually transferred to other institutions in the event of a failure. But those offerings aren't insured or otherwise protected by either the FDIC or government guidelines. Contents of safe deposit boxes also aren't protected by FDIC insurance.

The CSC offers additional suggestions for consumers.

Make sure a CD's value is $100,000 or less. Deposits are fully protected under federal law and FDIC rules because the basic insurance coverage is $100,000 per depositor per insured institution.

Customers may qualify for more than $100,000 in coverage at one insured bank if they own deposit accounts in different "ownership categories." For example, savings and checking accounts that are individually owned will be viewed as a single account and need to fall below the $100,000 limit for full protection. A jointly owned certificate of deposit, however, will be treated as separate from those accounts, and fully protected as long as it tops out at $100,000.

According to the CSC, FDIC rules for some ownership categories allow you to hold more than $100,000 in one account and still be insured. Most retirement accounts are insured up to $250,000 per owner per bank.

Revocable trust accounts can be insured for up to $100,000 for each beneficiary. Accounts for five children with such an account can be insured for a total of $500,000.

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