"Only when the tide goes out do you discover who’s been swimming naked."
- Warren Buffett

Insurance for Asset Protection

Understand how your asset is covered by insurance if your firm fails ...

FDIC Deposit Insurance

FDIC is an independent agency created by the U.S. Congress to maintain stability and public confidence.
FDIC insurance is backed by the full faith and credit of the United States government.
FDIC insurance covers all deposit accounts, including:The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

Note: FDIC insurance does not cover investment and insurance products that banks may offer, such as stocks, bonds, mutual funds, life insurance policies, and annuities.

NCUA Deposit Insurance

Credit union deposits are insured by the National Credit Union Share Insurance Fund (NCUSIF), which is managed by NCUA and is backed by the full faith and credit of the United States Government.
Money deposited in a federally insured credit union is insured up to $250,000, similar  to the FDIC insurance to banks.
Credit unions that are insured by the NCUSIF must display in their offices the official NCUA insurance sign. All federal credit unions must be insured by NCUA, and no credit union may terminate its federal insurance without first notifying its members.

Note: Similar to FDIC, NCUA insurance does not cover investment and insurance products that credit unions may offer, such as stocks, bonds, mutual funds, life insurance policies, and annuities.

SIPC Investor Protection

SIPC is a nonprofit membership corporation that was created by federal statute in 1970. Unlike the FDIC, SIPC does not provide blanket coverage. Instead, SIPC protects customers of SIPC-member broker-dealers if the firm fails financially. Coverage is up to $500,000 per customer for all accounts at the same institution, including a maximum of $250,000 for cash.
SIPC does not protect investors if the value of their investments falls. Mutual funds aren't covered by SIPC unless they are held in a SIPC-member brokerage firm.

Note: SIPC does not cover unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options.

Excess SIPC Insurance

Many brokerage firms pay for optional, additional insurance on the private market for their clients called “excess of SIPC” insurance in the unlikely situation where a client may exceed SIPC insurance limits.
For example, one firm can offer excess of SIPC insurance through Lloyd’s of London for eligible customers with an aggregate limit of $250 million, incorporating a customer limit of $49.5 million for securities and $1.75 million for cash.
You should contact your brokerage firm or look through your firm's policy details.

Note: The Lloyd's of London has a limited total aggregate insured amount per firm. Firms' disclosure, auditing, transparency, structure, practice, and behavior are all important factors when selecting the most healthy and ethical firm as your asset custodian.

Insurance Guaranty Association

State Insurance guaranty associations provide protection to insurance and annuity policyholders and beneficiaries of policies issued by an insurance company that is no longer able to meet its obligations. Most states provide the following amounts of coverage:Most states has an overall cap of $300,000 in total benefits for any one individual with the insolvent insurer.

Note: Guaranteed investment contracts (GICs) are not covered in many states.

PBGC Pension Protection

PBGC is a federal agency to protect pension benefits in private-sector defined benefit plans paying a set monthly amount at retirement. If your plan ends without sufficient money to pay all benefits, PBGC's insurance program will pay you the benefit provided by your pension plan up to the limits set by law.
PBGC's maximum benefit guarantee is set each year, and it is fixed as of that plan's termination date.

Note: PBGC does not insure those plans sponsored by:
  • "Professional service employers" (such as doctors and lawyers)
  • Church groups unless it is covered
  • Defined benefit plans sponsored by federal, state, or local governments
  • Any defined contribution plans such as profit-sharing or 401(k) plans