What is protected, and what is not: The guarantees, and their borders

You have money in an account, shares with a broker, life insurance. If the firm fails, what do you get back?

The answer depends on three different guarantees. And on one risk that nobody covers.

But before any guarantee, one check: is the firm allowed to operate?

In France, the official registers are public. The name, the authorisation number, the activity allowed. Thirty seconds is enough.

A site promising high returns and listed in no register? No guarantee will follow you there.

First guarantee: deposits. Current accounts, passbooks, term accounts.

If your bank fails, a fund repays you up to one hundred thousand euros, per person and per institution.

And in principle within seven business days. Not months: a week and a half at most.

The Livret A, the LDDS and the LEP have their own ceiling of one hundred thousand euros, on top. Together, not each.

In the app, this chapter is animated and narrated, card by card. Start free trial.

Beware of the trap: several brands can belong to the same bank. One ceiling for all of them.

Say one hundred and fifty thousand euros in one account, at a single bank. One hundred thousand are covered. Fifty thousand are not.

Second guarantee: securities. Your shares and funds are not deposits. They stay yours.

The broker must keep them separate from its own money. If it fails, they must come back to you.

If they have vanished, through fraud or error, a fund compensates you up to seventy thousand euros.

Third guarantee: life insurance. If the insurer fails, seventy thousand euros per person and per insurer.

Three guarantees, three ceilings, three different funds. They do not add up with each other.

And now, the twist. None of these guarantees protects against a fall.

Say ten thousand euros in shares. The market falls thirty per cent. You have seven thousand euros left.

The three thousand euros lost will be repaid by nobody. Your broker did not fail: the market fell.

The guarantee protects against the intermediary failing. Never against the risk of what you chose to buy.

Even a unit-linked fund in life insurance: its value can fall, and the guarantee changes nothing.

You carry market risk alone. The only way to reduce it is to diversify and give it time.

Remember the border: the firm failing is covered, up to a ceiling. Markets falling never is.