I was told if I am an account holder I am insured in the amount of holder x beneficiaries for FDIC - is this correct?
That's basically correct. There's a little more to it, though.
The FDIC does provide separate deposit insurance for what it calls "revocable trust accounts." These are accounts on which you have made clear your intention, reflected on the bank's records,that you intend the funds in the accounts to become the property of named qualified beneficiaries upon your death. Your bank may require that you open a separate account for each named beneficiary, or may permit you to name multiple beneficiaries on one account. The account has to include in its title some indication of that intent. For example, depending on state laws, your account might use the words "in trust for" or "as trustee for" or "payable on death." Abbreviations, such as ITF, TTEE, POD convey the same meaning.
Individuals who are qualifying beneficiaries include your spouse, child/children, grandchild/grandchildren, parent/parents, brother/brothers or sister/sisters. That includes your biological, adopted and step-children; biological, adopted and step-children of any of your children; your biological, adoptive and step-parents; your full brothers, half brothers, brothers through adoption and step-brothers; and your full sisters, half sisters, sisters through adoption and step-sisters. You have to provide the bank with the names of each of the beneficiaries to provide insurance coverage for his or her interest in the account.
The FDIC coverage amount is $100,000 for each named, qualified beneficiary. For example, if you have $1 million on deposit in the bank in revocable trust accounts naming your spouse, three children and six grandchildren as beneficiaries, there are ten qualified beneficiaries, and all $1 million will be insured.
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That's basically correct. There's a little more to it, though.