What does FDIC insurance provide?

FDIC insurance provides depositor protection for member banks, which means that if a bank that is insured by the Federal Deposit Insurance Corporation (FDIC) fails, depositors are protected against the loss of their insured deposits. This insurance covers checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs) up to the insurance limit, which is currently $250,000 per depositor, per insured bank.

This protection helps to maintain stability in the banking system by reassuring individuals that their deposits are safe, thereby encouraging the public’s confidence in the banking system. It does not cover investments in stocks, bonds, or mutual funds; therefore, deposits in those investments would not be insured by the FDIC. Additionally, FDIC insurance does not provide life or health insurance benefits; it is solely focused on the protection of depositors' funds in banks.