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Insured Deposit: What You Need to Know About Its Legal Definition
Definition & Meaning
An "insured deposit" refers to the amount of money that a depositor is entitled to receive from an insured depository institution, such as a bank or credit union, in the event of the institution's failure. This amount is calculated according to specific regulations outlined in federal law. In the context of foreign bank branches, an insured deposit must be payable in the United States and meet certain criteria set by regulatory authorities to ensure that the depositor is protected under U.S. law.
Table of content
Legal Use & context
The term "insured deposit" is primarily used in banking and finance law. It is relevant for individuals and entities that hold funds in banks, as it determines the extent of their protection in case of bank insolvency. The Federal Deposit Insurance Corporation (FDIC) is the main body that oversees these protections. Users can manage their banking relationships and understand their rights and protections through various legal forms available on platforms like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A U.S. citizen deposits $250,000 in a local bank that is insured by the FDIC. If the bank fails, the depositor is protected for the full amount since it falls within the insured limit.
Example 2: A corporation based in the U.S. has an account in a foreign bank branch. If the deposit meets the criteria set by the FDIC, it may also qualify as an insured deposit (hypothetical example).
Relevant laws & statutes
The primary statutes governing insured deposits include:
Federal Deposit Insurance Act [12 U.S.C. §§ 1811 et seq.]
Sections 7(i) and 11(a) of the Act [12 U.S.C. §§ 1817(i) and 1821(a)].
Comparison with related terms
Term
Definition
Key Differences
Insured Deposit
Deposits protected by federal insurance in case of bank failure.
Specific to banks and savings institutions; coverage limits apply.
Uninsured Deposit
Deposits not covered by federal insurance.
Higher risk as they are not protected in case of bank failure.
Common misunderstandings
What to do if this term applies to you
If you have deposits in a bank, check if the institution is FDIC insured. If your deposits exceed the insurance limits, consider diversifying your accounts across different banks to ensure full coverage. For assistance, explore US Legal Forms for templates that can help you manage your banking needs effectively. If you have complex financial situations, consulting a legal professional may be beneficial.
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