So how does someone insure their money if they win say $50,000,000? That is kinda stupid and I would not want that much money sitting in the bank uninsured. Unless you bought a ton of $100,000 CD's? So what do people do who win a large amount fir insurance? I heard there is something called a CDAR or something that covers up to $50 million.
But instead of worrying about insurance, investing, and taxes, I may just take the annuity at this stage being the jackpot is so high it doesn't matter much. At least you know a check is coming every year. Here is what the FDIC states:
"Thank you for contacting the FDIC. Your inquiry submitted via email reads as follows: "Hi I read that you insure $100,000 on Cd's or bank accounts? Is this the highest it goes? What if someone won the lottery and had about $50,000,000 how would that be insured? Or what would be covered and how? What about people who have hundreds of millions, how are they covered?..."
FDIC deposit insurance is determined according to how the funds are owned. Deposits held in an FDIC insured institution in the same "right and capacity" (which refers to legal ownership, such as single or joint ownership) are added together and insured up to $100,000 per ownership category (with self-directed retirement accounts such as IRA's insured up to $250,000). The insured amount includes principal and any earned interest. All types of deposits--certificates of deposit (CD's), checking, savings, money market, and NOW accounts--held in the same name(s) in the same ownership category are added together for calculation of deposit insurance. Funds held in different rights and capacities are separately insured. Deposits at different branches of the same FDIC insured institution, whether they are in the same state or in a different state, are added together in calculating deposit insurance coverage.
Basic Insurance Limit
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The basic insurance limit is $100,000. Principal and interest earned are included when calculating insurance coverage.
Deposits maintained in different categories of legal ownership are separately insured. Therefore, it is possible for a depositor to have more than $100,000 insurance coverage in a single institution if the funds are owned and deposited in different ownership categories. The most common categories of ownership used by depositors include individual ownership, joint ownership, Revocable Trust accounts, and Self-Directed Retirement Accounts. The insurance limit is applied to the combined total amount the owner holds within each ownership category.
The following are some of the most common ownership categories for individual depositors:
* Single Accounts
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A single (or individual) ownership account is an account owned by one person. All funds owned by an individual and deposited in one or more single ownership accounts are added together and insured up to a maximum of $100,000. The type of account (whether checking, savings, certificates of deposit, or other form of deposit) has no bearing on the amount of insurance coverage.
* Joint Accounts
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Deposits owned by two or more people (who need not be related). Each person's share in joint accounts are added together an insured up to $100,000. A joint deposit account is deemed to exist only if each co-owner has personally executed the account signature card and each possess withdrawal rights. In the case of a joint certificate of deposit or any deposit obligation evidenced by a negotiable instrument, the deposit must in fact be jointly owned. The interests of each co-owner are deemed equal unless otherwise stated on the insured bank's records in the case of a tenancy in common. These joint accounts are insured separately from single ownership accounts.
If these requirements are met, each person's total share of joint accounts at the same insured bank is added together and the total is insured to $100,000. The balance in a joint account can exceed $100,000 and still be fully insured if each co-owner's share of joint accounts at the same bank does not exceed $100,000. For example, if you had a $200,000 joint account with a friend, you each would be separately insured for $100,000 at the same insured bank.
* Revocable Trust Accounts
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The term "testamentary account" refers to a revocable trust account, tentative or "Totten" trust account, "payable-on-death" account, or any similar account which evidences an intention that the funds shall pass on the death of the owner of the funds to a named beneficiary. All of the deposits held in any accounts naming beneficiaries will be aggregated and insured in this category, if the appropriate requirements are met.
For "formal" trust agreements, the bank account title must include appropriate "trust language" (such as "revocable trust," "living trust", or "family trust.") If the beneficiary named in the trust is a spouse, child, grandchild, parent, or sibling of the owner, the funds are insured for up to $100,000 for each beneficiary's interest in the trust assuming an equal interest in the trust assets. If the beneficiary is NOT the owner's spouse, child, grandchild, parent, or sibling, all funds being held for all such beneficiaries are added together with any single ownership funds the owner may have at the same institution and insured in the Single Accounts ownership category. The beneficiaries do not need to be named in the bank records if the deposit was created using a "formal" trust agreement. The FDIC will obtain a copy of the trust agreement from the depositor if the bank fails to determine the identity of the beneficiaries.
For "informal" revocable trust accounts, use of "Payable-on-death (POD)," "In-trust-for (ITF)," "Transfer on death (TOD)," or any similar testamentary language in the deposit account title in the bank records indicates an intention that the funds will pass to a named beneficiary or beneficiaries upon the death of the owner(s) of the funds. If the beneficiary is a spouse, child, grandchild, parent, or sibling of the owner, the funds are insured up to $100,000 as to each beneficiary's interest in the trust. If the beneficiary is NOT the owner's spouse, child, grandchild, parent, or sibling, all funds being held for all such beneficiaries are added together with any single ownership funds the owner may have at the same institution and insured in the Single Accounts ownership category. Payable on death accounts must identify the beneficiaries by name in the account records of the institution (but not necessarily in the account title).
* Retirement Accounts
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Self-Directed Retirement accounts (such as IRAs or Keoghs) are insured separately from all non-retirement funds held at the institution. All IRA funds held at the same insured institution by the same person are added together, and the total insured to $250,000.
We recommend you visit our website to obtain additional information concerning deposit insurance coverage: www.fdic.gov/deposit/deposits/. If you click on any one of the listed deposit insurance products you will be taken to the product or an additional list and links to the product of your interest. Of particular interest we would suggest you review "Your Insured Deposits" (Comprehensive Guide) which explains in detail all of the deposit insurance categories.
This site also gives you access to our interactive Electronic Deposit Insurance Estimator (EDIE), which allows users to calculate the insurance coverage of their accounts and generate a printable report that clearly states if their deposits are fully insured or not.
We hope this information is helpful to you."
So what do people do with millions, or even billions? Is there a special account with insurance for those?