Making deposit insurance easier for consumers and bankers to understand has been a priority for the FDIC.

That's because confusion over the insurance rules has caused losses to some depositors who mistakenly believed all their funds were within the insurance limit, only to find out otherwise when their institution failed. That's why the FDIC has simplified the rules for joint accounts.

"These changes will greatly benefit consumers, says FDIC chair Donna Tanoue. "The new rules will be much easier to understand, and therefore it will be much less likely that a consumer will unknowingly exceed the $100,000 insurance limit."

"When ordinary depositors lost money as the result of being over the $100,000 insurance limit, the money usually was in joint accounts...," said Chris Hencke, an attorney in the FDIC's Legal Division in Washington. "The new rules should greatly reduce confusion about the insurance coverage."

The new rules, that went into effect on Apr. 1, apply to all existing and future joint accounts, including existing certificates of deposit.

The following overview is intended to help you understand the rule changes and what they can mean in terms of your deposit insurance coverage.

For many years, FDIC insurance coverage for joint accounts (those owned by two or more people) was calculated using a two-step process.

Step One: All joint accounts owned by the same combination of people at an insured institution were added together and insured up to $100,000.

Step Two: Each person's shares in all joint accounts at that institution were added together and insured up to $100,000. But many people were unaware of the first step. As a result, they mistakenly believed that a joint account

owned by two people would be insured up to $200,000, when the actual coverage was $100,000.

How do the new FDIC rules deal with this problem? Basically, the FDIC eliminated the first step but kept the second step.

"In other words, the FDIC will simply look at each person's share in all joint accounts at an institution and insure that person to $100,000 -- period," Hencke said. "That should be easily understood by the average depositor."

Now, for example, a joint account owned by two people is insured up to $200,000 (if that's the only joint account they have at the bank).

As before, your share in joint accounts will be covered to $100,000. This is in addition to the FDIC insurance your receive for other types of consumer accounts, such as individual, payable-on-death, and retirement accounts.

Say your spouse and you own a $200,000 joint account. The two of you have no other joint accounts at that same institution. How much of the $200,000 is covered by FDIC insurance if the institution were to fail?

Old rules: $100,000, because under the first of the two steps used to calculate coverage, all the joint accounts owned by the same combination of people at an insured institution were protected up to $100,000 total, no matter how many names were on the account.

New rules: $200,000, because now each person is insured up to $100,000 for his or her share of all joint accounts at an institution.

Lee Bryan, a Certified Financial Planner with Young, Stovall and Company, located in Pinecrest which specializes in planning and investing for retirees. This information was originally provided by FDIC Consumer News. Look for future articles on "safer investing" and, if you would like a "Your Insured Deposit" brochure or learn where the highest FDIC insured CDs can be found, call Lee at 800-433 5132, ext. 332.