What does the term "deposit insurance" refer to?

The term "deposit insurance" specifically refers to the protection provided to depositors, ensuring that individuals do not lose their insured deposits in the event of a bank failure. This insurance is a crucial component of the banking system, as it builds trust among consumers, encouraging them to deposit their money in banks knowing that it is safeguarded up to a certain limit, typically set by the Federal Deposit Insurance Corporation (FDIC) in the United States.

Deposit insurance covers various types of accounts, such as checking accounts, savings accounts, and certificates of deposit, and it plays a vital role in maintaining stability in the financial system. By securing depositors' funds, it helps prevent bank runs, where large groups of customers withdraw their deposits simultaneously out of fear of a bank's insolvency.

In contrast, the other options focus on different aspects that do not pertain to the specific definition of deposit insurance; they discuss insurance related to natural disasters, employees, or investment losses, rather than the direct protection of depositor funds.