What Does FDIC Insurance Cover?

The Federal Direct Insurance Corporation, or FDIC, is an independent government agency that insures consumer bank deposits against bank collapses. Most depositors enjoy up to $250,000 in coverage per bank, per account type. 

What products does FDIC insurance cover? 

FDIC insurance covers deposits and deposit accounts at insured banks, including:

• Checking, savings and money market deposit accounts
• Certificates of deposit (CDs)
• Cashier’s checks and money orders
• Certain retirement accounts
• Certain trusts
• Business and government-owned accounts

Ownership categories

The FDIC provides standard insurance of $250,000 per depositor, per ownership category, per insured bank. 

Some products, like checking and savings accounts, are lumped into one ownership category. That means your $250,000 coverage is “shared” by multiple accounts. 

But if you have two ownership categories at one bank, or the same category at two different banks, you’re insured up to $250,000 per account.  

Types of ownership categories

The FDIC divides deposit accounts into several categories covering consumers, businesses, and even government entities. Here, we’ll focus on the most common consumer deposit accounts. 

• Single accounts include deposit accounts owned by one person with no named beneficiaries, such as checking, savings and money market deposit accounts. 
• Joint accounts include deposit accounts owned by 2+ people with no named beneficiaries. All owners must be living people with equal withdrawal rights. 
• Certain retirement accounts include plans that permit participants to direct their investment strategy. Examples include IRAs, self-directed 401(k)s, and section 457 plan accounts. 
• Employee benefit plan accounts include retirement plans that are not self-direct, such as pensions and defined benefit plans. 
• Revocable trust accounts include single or joint deposit accounts that name at least one beneficiary. The FDIC insures revocable trusts at $250,000 per beneficiary, per owner. 
• Irrevocable trust accounts include deposit accounts held within an officially-established irrevocable trust. The FDIC insures irrevocable trusts at $250,000 maximum or $250,000 per beneficiary, depending on the structure.    

What does FDIC insurance not cover?

FDIC insurance explicitly excludes investments – even those purchased at FDIC-insured banks – like: 

• Stocks and bonds
• Mutual funds
• Treasuries
• Cryptocurrencies and NFTs
• Life insurance policies
• Annuities

Instead, investors are protected by SIPC insurance in the event that assets go missing. (Unfortunately, even SIPC insurance doesn’t pay out when the stock market collapses.) 

The FDIC also generally excludes money held in financial apps like PayPal, though rules may vary.

When does FDIC coverage kick in? 

FDIC insurance guards against bank failures by selling deposit accounts to a healthy bank or paying depositors any lost funds. (Up to insured limits.) 

In the event of a merger, the FDIC will also insure deposits from each bank separately for at least six months. Depositors can use this grace period to restructure their finances for maximum coverage, if necessary. 

However, FDIC insurance does not cover:

• Theft or robbery, including from safe deposit boxes
• Unauthorized access to your account
• Investment-related losses

What this means for you

FDIC insurance is there to protect your deposits from potential bank collapse. But it has limits – and as your accounts grow, you may need to move money around to stay fully covered. 

And when you’re ready to put some of that cash to work for you, Q.ai’s AI-backed Investment Kits are waiting.