As mentioned before, general obligation bonds are of this type. These insurers guarantee that they will pay bondholders their interest and principal if the issuers default. Both individuals and issuers may carry insurance. Large commercial banks also sometimes guarantee bonds. Insured bonds are rated higher than non-insured bonds, but pay lower interest rates.
Most municipal bonds are free of federal income taxes on interest distributions.
Also, most are free of state and local taxes in the state in which they are issued. These features make them hugely popular among small investors. However, capital gains are not exempt from taxes. Gains on municipals sold at discount are considered interest and not capital gains. The Tax Reform Act of 1986 created classes of bonds that are subject to federal income tax.