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Credit Unions insured by the National Credit Union Share Insurance Fund (NCUSIF), an arm of the National Credit Union Administration (NCUA) are protected by federal deposit insurance. Your redit union accounts are insured up to $100,000. Individual Retirement Accounts (IRA) are insured separately up to $250,000 (effective April 1, 2006). NCUA is an independent agency of the United States government. Insured credit unions display the symbol above.
Who pays for federal share insurance?
The cost of this important credit union benefit is borne by credit unions. As a member, you do not pay directly for share insurance protection. Your shares and savings are not only insured by this federal fund, the fund is backed by the full faith and credit of the U.S. Government. To date, not one penny of insured savings has ever been lost by a member of a federally insured credit union.
How much coverage does each credit union member has?
Share accounts in federally insured credit unions are insured up to $100,000 – just as with the FDIC coverage at banks. Generally, if a credit union member has more than one individual account in the same insured credit union, those accounts are added together and are insured up to $100,000. The amounts a member may have in IRAs, Joint Accounts, and Revocable Trust Accounts do not count towards this total. Shares maintained in different legal ownership capacities may each be separately insured. There are numerous combinations of accounts which can increase the total coverage (see some examples below).
How are joint accounts and revocable trust accounts insured?
A joint account is owned by more than one person. Each joint owner has equal rights and access to the funds in the account. Under NCUA regulations, each joint owner gets up to $100,000 coverage for their “share” of the funds in jointly owned accounts. For example, if two joint owners have $200,000 in their jointly owned accounts at an institution, the full amount is covered - $100,000 for each owner. If there are three joint owners, the maximum coverage is $300,000 - $100,000 for each joint owner. Each individual is limited to $100,000 maximum coverage for funds in joint accounts at one credit union, even if there is more than one combination of joint owners.
The funds in a revocable trust account, also known as a totten account or “payable on death” accounts (POA), is paid to named beneficiaries in the event of the owner’s death. While living, the owner has use of the funds and can revoke the trust (remove or change beneficiaries). If the beneficiaries of a revocable trust account are a spouse, child, grandchild, parent, or sibling of the owner, the funds in the account are separately insured to $100,000 per beneficiary in addition to any insurance valid on an individual or joint accounts. To qualify for coverage under NCUA regulations, there are several conditions that must be met:
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Beneficiaries must be a qualifying family member.
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Beneficiaries must be specified in the account records.
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The title of the must include a term such as in trust or payable on death to.
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It must be the owner’s intention that the account belongs to the named beneficiary upon their death.
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