Financial businesses covered by insurance

After the failure of IndyMac Bank, you may be wondering if other financial institutions, such as brokerages and life insurers, are covered by some form of insurance. The answer is yes, but coverage is more complex than federal deposit insurance.

The Federal Deposit Insurance Corp. covers deposits up to $100,000 per person per bank. It also insures retirement account deposits for $250,000. So, you can have $100,000 in a checking account and $250,000 in an IRA certificate at one bank, and all would be insured.

You can obtain additional coverage according to how your accounts are titled. To help you figure out what's covered, FDIC has an online deposit-insurance estimator at fdic.gov/edie/index.html.

When FDIC acts, it usually arranges for a healthy bank to acquire a failing bank. In an acquisition, deposits typically continue to earn interest at the same rate as before.

If your brokerage fails, Securities Investor Protection Corp. covers you if your brokerage can't return all the cash or securities in your account. SIPC action can take a while, up to three months.

SIPC covers cash assets up to $100,000 and replaces up to $500,000 of securities, such as stocks and bonds. To get your SIPC claim covered, you need to prove which securities you owned when the brokerage failed. Be sure to keep copies of statements and confirmation slips.

Let's say your insurance company dies before you do.

Typically, state guaranty associations cover $300,000 in insurance death benefits per insured life.

For whole-life policies, state guaranty funds typically insure up to $100,000 in paid-up cash value per insured life. They cover individual annuity contracts, too, usually up to $100,000.