Question 7 One of these four answers best defines the term deposit insurance. Which one? Deposit insurance is the reserve that banks hold exceeding the legally mandated limit. Deposit insurance is the interest rate at which one bank lends funds to another bank overnight. 1 pts Deposit insurance is a system that makes sure depositors in a bank do not lose their money, even if the bank goes bankrupt. Deposit insurance is a strategy that increases the supply of money and the quantity of loans.