Insured Accounts

We believe that one of the best ways to keep your money safe is to insure it.  There are different types of insurance and safe accounts available to the average individual/entity, such as:

1) Market-Linked CD's - These are an alternative type of CD, with full FDIC Insurance, that has historically provided a much higher rate of return than traditional CD's , with no risk to your principal.  We use the nation's strongest banks, with innovative products that  help you sleep at night, while earning a respectable return.  These often have no and negligible fees to purchase and own, and can pay interest monthly or annually.

2)  Savings/Checking/Certificates of Deposit - these are types of accounts typically found at banks, or representatives thereof, which are insured by the FDIC.  In today's world, the lines have become blurred somewhat concerning who owns who.  Sometimes, insurance companies own banks, and vice versa.  Sometimes Investment Brokerage companies own banks, and vice versa.  This means that it is possible that an insurance agent or stock broker may be able to offer you accounts similar to what you would typcially find at a bank, with the FDIC insurance to go with it.  Any FDIC insured account, regardless of where you open it, offers the same FDIC protection.  Please note that not all accounts opened at a bank, insurance company, or investment brokerage office are necessarily insured by FDIC.  Many banks, insurance and investment offices also offer other types of accounts not associated with or insured by FDIC.   For the last few years, many FDIC insured accounts have not paid the owners thereof an acceptable rate of interest.  Make sure you know what other options are available to you before opening an account that may not meet your needs.  The other consideration is the strength of the underlying institution.  To help you determine that, we provide the following link, to let you see the relative strength of the bank you are dealing with:

 www.bankrate.com/rates/safe-sound/bank-ratings.aspx

3)  Just as it is rare for someone to lose money in a bank account (up to the limit of FDIC Insurance), it is just as rare for someone to lose money in an insured product issued by an insurance company.  Most insurance companies begin with a much stronger balance sheet than most banks do, because of the more stringent reserve capital requirements that insurance companies must meet.  While a bank may be able to operate with $ 0.20 in reserve to back each $1.00 of assets, an insurance company must operate with a minimum of $1.00 in reserve to back each $1.00 of assets.  This is a much stronger model from the start, and hence the term "insurance".  The accounts of many insurance companies are further insured by the LHGA (Life & Health Guaranty Association), which provides an additional safety net, up to program limits, for owners of certain insurance policies in their home state.  In the last few years, several hundred banks have become insolvent, requiring the FDIC to be activated to bail out and protect account owners.  Insurance companies have had far fewer problems than banks, and consequently the LHGA for each state has been relatively idle (like the Maytag repairman), and are in great financial shape.  Not all products issued by insurance companies are insured against losses, however.  Make sure you tell your financial advisor that you only want policies that are fixed and insured.  Guarantees are based upon the claims paying ability of the issuer.  The strength of an insurance company is of utmost importance.  We recommend that people work with companies that exceed the $1.00 requirement by a comfortable margin.  We work with several such companies that are strong financially, and that pay competitive interest rates on their guaranteed accounts, products, and policies.  Just as the FDIC does not insure U.S. Savings Bonds, neither do they insure guaranteed products issued by the insurance industry.  People have relied on insured accounts and policies from the insurance industry to keep their money safe for hundreds of years, including through the years of the Great Depression.