Federal Deposit Insurance 101

MoneyTips

The Federal Deposit Insurance Corporation (FDIC) is a U.S. Government regulatory agency that has three primary purposes:

• Insure bank deposits of member banks;
• Assist with banking regulations;
• Deal with failing banks.

Let's look at each of these jobs in a little more detail.

Deposit Insurance

The FDIC does insure bank deposits in the United States, but it does not insure all banking products. Checking accounts, savings accounts, NOW accounts, Certificates of Deposit (CDs), and money market accounts are all considered deposited assets and are covered. The FDIC also covers financial vehicles such as IRAs and trusts (both revocable and irrevocable). However, non-deposited assets such as mutual funds, stocks, bonds and life insurance policies are not covered.

FDIC coverage is limited specifically to bank failures. The FDIC does not cover natural disasters, theft and other means of loss unrelate...