Understanding FDIC Insurance for Payable on Death Accounts

As estate planning attorneys, we often remind clients that their estate plan isn’t done when they have signed their will or trust.  Just as important are the beneficiary designations of their assets.

Recent events have prompted questions about beneficiary designations of bank accounts and their effect on the amount of FDIC insurance.  In this blog post, we will focus on understanding how FDIC insurance works for payable on death (POD) accounts.

What is a Payable on Death Account?

A payable on death (POD) account, also known as a Totten trust or an informal trust account, is a type of deposit account that allows the account holder to designate one or more beneficiaries to receive the funds upon the account holder’s death. The account holder maintains full control over the funds during their lifetime, and the designated beneficiaries have no rights to the funds until the account holder’s death. These accounts can be set up as savings accounts, checking accounts, or certificates of deposit (CDs).

FDIC Insurance Basics

The Federal Deposit Insurance Corporation (FDIC) is an independent government agency that protects depositors’ funds in the event that a bank fails. FDIC insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category. It’s essential to understand that FDIC insurance does not cover investments such as stocks, bonds, or mutual funds.

How Does FDIC Insurance Apply to POD Accounts?

When it comes to POD accounts, FDIC insurance coverage is determined by the number of beneficiaries and the amount of funds in the account. Each beneficiary is insured up to $250,000, and the coverage is separate from the account holder’s other accounts at the same bank. For example, if an account holder has a single POD account with two beneficiaries, the total FDIC insurance coverage for that account would be $500,000 ($250,000 for each beneficiary).

It’s important to note that the FDIC will only insure POD accounts if the beneficiaries are specifically named in the bank’s records. If the account holder uses a general term like “my children” without listing their names, the FDIC may not recognize the account as a POD account, which could affect the insurance coverage.


In summary, FDIC insurance for payable on death accounts offers a layer of protection to your hard-earned money and provides peace of mind for both account holders and beneficiaries. To maximize the benefits of FDIC insurance, it’s crucial to ensure that your beneficiaries are explicitly named in your bank’s records. As you navigate your financial journey with your attorneys and advisors, understanding the nuances of FDIC insurance can help you make informed decisions about your asset protection strategy.