What are federal deposit insurance programs?

The presence of federal deposit insurance on your accounts is often not readily apparent; sometimes its only observable by the seal posted on a banks door or by an image of the seal on the banks website. However, the presence or absence of deposit insurance on your bank account can have a critical impact on the safety of your money.

Suppose that walking into your financial institution, you see the following sign on the door:

You are walking into .

What institutions are protected by the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Share Insurance Fund (NCUSIF)?

The FDIC oversees and manages two separate insurance funds that apply to banks and savings associations. These two funds include the Savings Association Insurance Fund (SAIF), which provides coverage for and the Bank Insurance Fund (BIF), which insures deposits in .

In an arrangement that seems inconsistent, mutual savings banks are insured by the .

In contrast, funds held in federally chartered credit unions are insured by the .

The following scenarios focus on how the presence or absence of deposit insurance deposits affects the depositors wealth.

Suppose that Hubert and Kate are going to be married next summer. They maintain a joint savings account, which currently has a balance of $15,025. If the bank failed this evening, the maximum amount of coverage that would be provided by the Savings Association Insurance Fund is .

Suppose that after working for the last 28 years, Poornima has accrued a retirement account with a balance of $158,375. The account is held in an institution that does not carry any deposit insurance. The maximum amount of deposit coverage that would be provided if the institution failed tomorrow is: .