Certificates of deposit are FDIC-insured up to $250,000 per individual account. That means your investment with your institution of the deposit is safe in case of any eventuality. However, there are situations when the FDIC does not cover your CD. For example, if you decide to withdraw funds before maturity, you will incur penalties, which may even eat into your principal amount. Also, if a financial crisis such as a market crash occurs, some financial institutions may reduce CD rates due to the prevailing market conditions. The amount you’ll lose due to the reduced rates is not covered by the FDIC insurance.