What is FDIC Insurance and What are the Limits?

FDIC stands for Federal Deposit Insurance Corporation.  It’s an independent agency of the U.S. Government that is in place to protect depositors against loss in case their bank fails.  The bank, however, must have FDIC insurance otherwise their depositors will not be covered.

Since October 3 2008, the FDIC insurance limits have been set at $250,000 per account holder per insured institution.   This means that if an FDIC insured bank were to fail, your assets would be insured up to the limit of $250,000 at each financial institution that you have an account.  A banking customer may qualify for more than $250,000 in coverage “if the customer’s funds are deposited in different ownership categories and the requirements for each ownership category are met,” according to the FDIC website.

What is Insured Under FDIC?

If your bank is covered under FDIC insurance, it’s important to understand what assets are insured.  Generally, accounts such as checking, savings, money market deposit, and CDs are insured under FDIC.

Accounts not insured by FDIC include:

Mutual funds, annuities, life insurance policies, stocks and bonds.  These fluctuating investments are not guaranteed by the government, but may be protected under the SIPC (Securities Investors Protection Corporation), which is a non-government entity that protects investors.

FDIC Calculator to Estimate Protection

The FDIC website has an FDIC calculator that estimates your FDIC insurance coverage.  By providing your bank name, type of account, ownership status, owner name, account balance, and deposit type, you can use the FDIC insurance calculator to check how much you’re protected under FDIC.

The following FDIC Insurance Chart shows the protection limits provided according to account type.