The use of multilayer ceramic chip capacitors as integrated passive in, e.g., system in package applications needs methods to examine and predict their reliability. Therefore, a nondestructive failure analytical technique is described to detect cracks in the ceramic and the metallic layers within encapsulated 0402 surface mount device (SMD) capacitors. After choosing from techniques to reproducibly generate cracks, it is shown that an in situ capacitance measurement is a convenient method to detect these failures unambiguously. Finite element simulations support the experimental results. A reliability estimate for capacitor integrity under given loading conditions is given.