Many Americans keep money in bank accounts, brokerage accounts and investment products offered through financial institutions. These accounts may appear together on one financial dashboard, but they do not all receive the same legal protection.
Federal Deposit Insurance Corporation coverage protects qualifying deposits at insured banks. It does not protect investments against market losses, and it does not cover every product sold by a bank.
What the FDIC Covers
The standard FDIC insurance limit is $250,000 per depositor, per insured bank, for each account ownership category.
Covered deposit products generally include checking accounts, savings accounts, money market deposit accounts and certificates of deposit.
The limit is not simply $250,000 for every account. The FDIC combines deposits held by the same depositor in the same ownership category at the same bank when determining coverage.
What the FDIC Does Not Cover
Stocks, bonds, mutual funds, annuities, life insurance and cryptocurrency are not FDIC-insured investment products. U.S. Treasury securities are also not FDIC-insured deposits, although they are backed by the full faith and credit of the U.S. government.
A bank may offer both insured deposits and investment products through different divisions or affiliated businesses. The fact that an investment is purchased at a bank branch does not automatically make it FDIC-insured.
Customers should read account documents and ask whether a product is a deposit or an investment.
What SIPC Does
Brokerage accounts may have a different form of customer protection through the Securities Investor Protection Corporation.
SIPC generally helps customers when a member brokerage firm fails and customer assets are missing. Its protection is not insurance against a decline in stock prices, poor investment decisions or the failure of an investment itself.
The distinction matters. FDIC insurance protects eligible deposits against the failure of an insured bank. SIPC protection addresses missing customer property when a covered brokerage firm fails.
How to Check Coverage
The FDIC provides an online Electronic Deposit Insurance Estimator to help customers review their coverage. Account ownership, beneficiaries and the legal structure of accounts can affect the calculation.
Customers with deposits approaching or exceeding the standard limit should check how their accounts are titled and whether they qualify for separate coverage under different ownership categories.
The Bottom Line
Not every financial product held at a bank or brokerage firm is protected in the same way. FDIC insurance applies to eligible bank deposits, while SIPC protection addresses certain missing assets when a member brokerage fails. Neither protects investors from ordinary market losses. Knowing the difference can prevent a costly misunderstanding about the safety of an account.
This article is for informational and educational purposes only and should not be considered personalized financial or legal advice.
