This article was originally published in our weekly newsletter.

Many people appreciate the $250,000 guarantee offered by banks through the FDIC program.

This guarantee is only available for cash and various products within a bank.

However, your brokerage account is not a bank.

They have their own version of the FDIC, known as SIPC.

SIPC does not guarantee the value of securities (investing in the market has risk), but there is a guarantee of around $500,000 total per customer (including $250,000 cash).

To be clear, the $500,000 coverage applies to the account as a whole, including positions that may need to be sold or transferred, as long as they retain value.

The cash guarantee limit for SIPC is $250,000.

Just like if a bank fails and the FDIC steps in, if a brokerage firm becomes insolvent, SIPC steps in to arrange transfers of account liquidation to help you get your money.

Another place you may place your money is with an insurance company.

Insurance companies have a different setup.

There is no federal level of guarantee because the states oversee insurance companies.

Each state varies, but generally speaking, the guaranteed coverage within insurance companies is as follows:

• Death Benefits: Up to $300,000

• Cash Surrender or Withdrawals from Life Insurance: Up to $100,000

• Annuity benefits: Up to $250,000

• Major medical or basic hospital benefits: Up to $500,000

• Long-term care benefits: Up to $300,000

• Disability benefits: Up to $300,000

• Other health insurance benefits: Up to $100,000

You can learn more about your insurance guarantees here.

The Takeaway

This email is intended to be friendly and explain the different ways various forms of government (federal or state) can fully or partially protect your investments and products.

I do not anticipate any significant market crash or collapse happening in the near future.

My intention in writing today’s email is to point out that FDIC is not the only layer of protection.

There are other places you can put your money and still have similar levels of government-backed guarantees.

That said, don’t proceed with an investment or product because of these guarantees.

Make sure you do your due diligence.

Work with banks, brokerages, and insurance companies that are in good financial standing.

The ideal situation is that you never need any of these layers of protection.