Insured Bond

See: American Municipal Bond Assurance Corporation.

Bonds are promises. Think: your bond is your word, or something like that.

When a given issuer (like a company, a country, or an individual) issues a bond, i.e. asks investors to rent them cash for a period of time for a given interest rate, there exists an implicit promise that the dough will be paid back. There is an additional entity guaranteeing that, if the issuer fails or reneges or just sucks,the other party will repay all the interest and principal on the bond. It gives reassurance to the lenders who likely then can be convinced to drop their interest rates a tad, or to at least make the loans in the first place versus just a cold "pass."