DEFINITION of 'Bank Insurance'

A guarantee by the Federal Deposit Insurance Corporation (FDIC) of deposits in a bank. Created in 1989, the Bank Insurance Fund is the federal fund used to insure bank deposits of national and state banks, that are members of the Federal Reserve System. Bank Insurance helps protect individuals who deposit their savings in banks, against commercial bank insolvency. Each depositor is insured to at least $250,000 per bank.

BREAKING DOWN 'Bank Insurance'

The FDIC, an independent U.S. government corporation, was initiated under the Glass-Steagall Act of 1933. Its purpose was to insure bank deposits against loss and to regulate banking practices. The collapse of a great majority of banks in the United States, during the Great Depression, prompted the creation of the FDIC.

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RELATED FAQS
  1. Why is my 401(k) not FDIC-Insured?

    Learn about the Federal Deposit Insurance Corporation (FDIC) and whether its protection extends to 401(k) accounts or just ... Read Answer >>
  2. Why are mutual funds not FDIC-insured?

    Discover why mutual funds are not insured by the FDIC, and learn what protection is offered for these and other similar financial ... Read Answer >>
  3. What agencies were created by the Glass-Steagall Act?

    Learn about the Glass-Steagall Act of 1933 that significantly reformed the banking industry, and specifically, what government ... Read Answer >>
  4. Are 401ks FDIC insured?

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  5. Are my investments insured?

    No. Whenever you invest in a stock, bond or mutual fund, there is no insurance against the possible loss of your initial ... Read Answer >>
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