# Can you take out insurance policies on monetary investments? **URL:** \ **Category:** Factual Questions\ **Created:** [February 16, 2009, 10:41pm UTC](https://boards.straightdope.com/t/can-you-take-out-insurance-policies-on-monetary-investments/486179 "2009-02-16T22:41:16Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![TNWPsycho](https://avatars.discourse-cdn.com/v4/letter/t/47e85d/32.png) [@TNWPsycho](https://boards.straightdope.com/u/TNWPsycho)\ **Post date:** [February 16, 2009, 10:41pm UTC](https://boards.straightdope.com/t/can-you-take-out-insurance-policies-on-monetary-investments/486179/1 "2009-02-16T22:41:16Z")
I was thinking about this the other day, this is completely hypothetical, i’m not asking for advice. I go on a game show and my winnings after taxes equal $1,000,000. I put all of the million into a CD at the local bank earning 4% interest. Now that i’m making $40,000 a year just in interest i decide to quit my job and live on the interest i earn. Assuming that i’m single and the CD is my only form of income, would it be possible to protect it with an insurance policy? The FDIC only insures for $100K and if the bank goes under and i’m stuck with a measly 100G, i would probably have to get a job again (damn). ---
**Author:** ![dolphinboy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dolphinboy/32/330_2.png) [@dolphinboy](https://boards.straightdope.com/u/dolphinboy)\ **Post date:** [February 16, 2009, 10:49pm UTC](https://boards.straightdope.com/t/can-you-take-out-insurance-policies-on-monetary-investments/486179/2 "2009-02-16T22:49:30Z")
I believe the FDIC will insure you up to $250K now, so you could spread it over 4 different banks and you would be covered. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [February 16, 2009, 11:00pm UTC](https://boards.straightdope.com/t/can-you-take-out-insurance-policies-on-monetary-investments/486179/3 "2009-02-16T23:00:16Z")
I think the $250,000 increase in FDIC insurance is temporary. So another option is [CDARS](http://www.cdars.com/index.php). It’s a private company that will shift your deposits among member banks so all of the money (up to $50 million) is covered by FDIC insurance. ---
**Author:** ![beowulff](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/beowulff/32/542_2.png) [@beowulff](https://boards.straightdope.com/u/beowulff)\ **Post date:** [February 16, 2009, 11:05pm UTC](https://boards.straightdope.com/t/can-you-take-out-insurance-policies-on-monetary-investments/486179/4 "2009-02-16T23:05:56Z")
This sounds like a Credit Default Swap, which helped get us into the financial disaster we’re in now. > **[Credit default swap](https://en.wikipedia.org/wiki/Credit_default_swap)** > > A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default (by the debtor) or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, may expect to receive a payoff if the asset defaults. > In the event of default, the buyer of the credit default swap re... ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [February 16, 2009, 11:42pm UTC](https://boards.straightdope.com/t/can-you-take-out-insurance-policies-on-monetary-investments/486179/5 "2009-02-16T23:42:07Z")
> [@beowulff](#): > > This sounds like a Credit Default Swap, which helped get us into the financial disaster we’re in now. > [Credit default swap - Wikipedia](http://en.wikipedia.org/wiki/Credit_default_swap) No, it doesn’t, it sounds like [deposit insurance](http://en.wikipedia.org/wiki/Deposit_insurance). IOW, exactly what the FDIC does (up to the specified limit) and what some private banks will do for larger amounts. But you generally need a lot more than $1,000,000 to get private deposit insurance, since it’s relatively easy to get that through the FDIC by spreading it around. ---
**Author:** ![TimeWinder](https://avatars.discourse-cdn.com/v4/letter/t/bcef8e/32.png) [@TimeWinder](https://boards.straightdope.com/u/TimeWinder)\ **Post date:** [February 17, 2009, 1:18am UTC](https://boards.straightdope.com/t/can-you-take-out-insurance-policies-on-monetary-investments/486179/6 "2009-02-17T01:18:21Z")
> [@TNWPsycho](#): > > Assuming that i’m single and the CD is my only form of income, would it be possible to protect it with an insurance policy? Probably. You can get underwriters to underwrite almost anything, but they’ll decide the price for the insurance based on the risk (and there’s always the risk of them going under, too). But a more formal version of the same idea already exists, in the form of options. Trade in your CD for a stock purchase (likely to produce better income than the CD, anyway, the last year notwithstanding), and you can “protect” the investment by purchasing a sell option at the same time. Effectively, you’re paying money for the right to sell a specific security at specified time in the future, at a price you specify now. If you’re lucky and the stock goes up, you’re out the value of the option when it expires (and can buy a new one at that time), otherwise you exercise the option and get your money back (or some desired fraction). It’s actually very similar to insurance.