What does 'payable on death' (POD) mean in FDIC insurance?

'Payable on death' (POD) is a financial designation that allows account holders to name one or more beneficiaries who will receive the funds in the account upon the account holder's death. This structure provides an efficient way for assets to pass to heirs without the need for probate, simplifying the transfer process. When the account holder dies, the named beneficiaries can collect the funds directly, typically with just a death certificate, avoiding lengthy legal processes. This feature underscores how POD accounts can offer both security and convenience for those planning for their financial legacy.

The other options do not accurately reflect the nature of POD accounts. Immediate availability of funds is not guaranteed, as it depends on the account holder's status. Insuring an account for double the amount is not a function of the POD designation but rather pertains to how account sizes and number of beneficiaries affect FDIC insurance limits. Lastly, withholding funds until a court order is obtained contradicts the essence of POD accounts; they are specifically designed to bypass such legal hurdles for beneficiaries.