Understanding Deposit Insurance

Deposit insurance is a form of protection in the rare case of a bank failure, and it is a significant benefit of having an account with an FDIC-insured bank. The Federal Deposit Insurance Corporation (FDIC) offers several resources – four of which are included below, to better explain deposit insurance and the types of accounts it covers.

One common question about deposit insurance is how much it covers. The FDIC clarifies that “the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.” It is also worth noting that you do not need to purchase deposit insurance at any FDIC-insured bank.

To better understand how much of your money is insured, the FDIC provides a helpful tool called Electronic Deposit Insurance Estimator (EDIE) that details how the insurance rules and limits apply to a depositor’s accounts on a per-bank basis. This tool is especially helpful for individuals or businesses with multiple accounts that add up to over $250,000.

Aside from knowing how much is covered by deposit insurance, it is also important to know which types of accounts are typically covered by the FDIC. Some common accounts that are typically covered include:

  • Checking accounts
  • Negotiable order of withdrawal (NOW) accounts
  • Savings accounts
  • Money market deposit accounts (MMDA)
  • Certificate of deposit (CD) accounts
  • Items issued by banks such as cashier’s checks or money orders

At the same time, there are also certain accounts that are not typically covered by deposit insurance. These include:

  • Stocks
  • Bonds
  • Mutual funds
  • Life insurance policies
  • Annuities
  • Municipal securities

To help clear up as much confusion as possible, the FDIC offers a list of frequently asked questions in relation to deposit insurance. Here you can find answers to questions such as:

  • What is the FDIC?
  • What is deposit insurance?
  • What happens when a bank fails?
  • How can I get deposit insurance?
  • How do I find out if a bank is FDIC-insured?
  • Can I have more than $250,000 of deposit insurance coverage at one FDIC-insured bank?

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