Understanding FDIC Insurance

Higher yields are certainly inviting to many investors, but individuals who value principal protection and predictability over the long term want more.

They want to make sure their funds will be available when the time comes to meet future financial obligations.

That’s where the Federal Deposit Insurance Corporation (FDIC insurance) comes in.

What is FDIC insurance?

The FDIC is an independent agency of the U.S. Government established by Congress in 1993. The FDIC's mandate is to:

• insure bank deposits,
• help maintain sound conditions in our banking system, and
• protect the nation’s money supply in case of financial institution failure.

The FDIC insures deposits in banks and savings associations through various privately financed insurance funds. These FDIC insurance funds are backed by the "full faith and credit" of the United States.

Most certificates of deposit carry FDIC insurance

As noted, all certificates of deposit purchased through a credible financial institution carry full FDIC insurance on principal and interest. With Equity Linked certificates of deposit, only principal is fully insured.