Because they seek peace of mind about the savings they've worked so hard to collect over the years, older Americans place their money... and their confidence... in FDIC-insured bank accounts. Here are a few things seniors should be aware of when it comes to FDIC insurance.

1. The basic insurance limit per depositor per insured bank is $100,000

You don't need to worry about your insurance coverage if you or your family have $100,000 or less in all of your deposit accounts at the same covered bank. Your money is entirely protected. Even if the banks are related, such as belonging to the same parent business, your deposits in separately licensed institutions are separately insured.

2. You may qualify for more than $100,000 in coverage at one insured bank if you possess deposit accounts in various ownership categories.

Single ownership accounts (for one owner), joint ownership accounts (for two or more people), self-directed retirement accounts (Individual Retirement Accounts and Keogh accounts for which you choose how and where the money is deposited) and revocable trusts are the most common ownership categories for consumers (a deposit account saying the funds will pass to one or more named beneficiaries when the owner dies). 

Deposits in various ownership types are protected individually. If the money are in distinct ownership categories, a single person might have considerably more than $100,000 in FDIC insurance coverage at the same bank.

3. If a family member dies or divorces, the FDIC insurance coverage may be reduced.

Let's assume there are two persons who possess an account, and one of them passes away. The FDIC's guidelines provide survivors or estate executors a six-month grace period following a depositor's death to reorganize accounts. However, if you do not act within six months, your accounts may exceed the $100,000 limit.

Example: 

A husband and wife have a joint account with a "right of survivorship," which states that if one person dies, the other will possess all of the money. Because there are two owners, the account is fully insured for a total of $150,000 (providing them up to $200,000 in coverage). 

However, if one of the two co-owners dies and the remaining spouse does not alter the account within six months, the $150,000 deposit is immediately reduced to $100,000 as the surviving spouse's single-ownership account, along with any additional single-ownership accounts at the bank. As a result, if the bank failed, $50,000 or more would be beyond the insurance limit and at danger of loss.

Also keep in mind that the death or divorce of a beneficiary on a trust account might instantly lower the insurance coverage. In certain cases, there is no six-month grace period.

4. As a result of a collapse, no depositor has lost a single penny of FDIC-insured money.

When an FDIC-insured financial institution collapses, FDIC insurance kicks in. And, thankfully, bank collapses are becoming increasingly infrequent. This is due to the fact that all FDIC-insured banking institutions must fulfill stringent financial strength and stability requirements. 

However, if your bank were to collapse, FDIC insurance would cover your deposit accounts, principal and interest, up to the insurance maximum, dollar for dollar.

You may be able to reclaim some or, in rare circumstances, all of your uninsured cash if your bank collapses and your deposits exceed the federal insurance maximum of $100,000. The vast majority of depositors in collapsed institutions, on the other hand, are within the $100,000 insurance cap.

5. The deposit protection guarantee of the Federal Deposit Insurance Corporation (FDIC) is unbreakable.

The FDIC has $48 billion in reserves to safeguard depositors as of mid-2005. Some people claim they've been warned by the FDIC that it doesn't have the resources to cover depositors' insured cash if an unprecedented number of banks collapse (typically by marketers of investments that compete with bank deposits). That is incorrect information.

6. In the event that an insured bank fails, the FDIC compensates depositors swiftly.

Most insurance payments are made within a few days of the bank closing, generally the next working day. Don't accept the rumors that the FDIC takes years to reimburse insured depositors propagated by unscrupulous investment salespeople.

7. It is your responsibility to be aware of your deposit insurance coverage.

Know the regulations and keep your money safe.