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The National Credit Union
Administration (NCUA) is the federal agency that administers the
National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF,
like the FDIC’s Deposit Insurance Fund, is a federal insurance fund
backed by the full faith and credit of the U.S. Government.
The NCUSIF insures member savings in federally insured credit
unions, which account for approximately 98 percent of all credit
unions. All federal credit unions and the vast majority of
state-chartered credit unions are covered by NCUSIF insurance
protection.
Credit unions that are insured by NCUSIF must display the official
NCUA insurance sign. No credit union may terminate its federal
insurance without first notifying its members.
Here are some important facts to remember about your share
insurance provided by the NCUSIF:
Not one penny of insured savings has ever been lost by a member of a
federally insured credit union.
As a member of a federally insured credit union, you do not pay
directly for your share insurance protection. Your credit union
places a deposit into the NCUSIF and pays an insurance assessment
based on the total amount of insured shares and deposits in the
credit union. Federally insured credit unions are required to
deposit and maintain one percent of their insured shares and
deposits in the NCUSIF.
Most share accounts in federally insured credit unions are insured
up to the Standard Maximum Share Insurance Amount (SMSIA), $100,000
as of April 2006, which may increase in the future. 2006 legislation
increased the insurance coverage on certain retirement accounts,
such as IRAs and Keoghs, up to $250,000. Generally, if a credit
union member has more than one account in the same credit union,
those accounts are added together and insured in the aggregate.
There are exceptions. You may obtain additional separate coverage on
multiple accounts, but only if you have different ownership
interests or rights in different types of accounts and you properly
complete account forms and applications. For example, if you have a
regular share account and an Individual Retirement Account (IRA) at
the same credit union, the regular share account is insured up to
$100,000 and the IRA is separately insured up to $250,000. However,
if you have a regular share account, a share certificate, and a
share draft account, all in your own name, you will not have
additional coverage. Those accounts will be added together and
insured up to $100,000 as your individual account. Additionally,
shares denominated in foreign currencies are insured as outlined in
NCUA Rules and Regulations.
Coverdell Education Saving Accounts, formerly education IRAs, are
insured as irrevocable trust accounts and will be added to a
member’s other irrevocable trust accounts and insured up to the
SMSIA. Roth IRAs will be added together with traditional IRAs and
insured up to $250,000.
Additional coverage is available on revocable trust or payable on
death accounts on a per beneficiary basis. You can now name a parent
or sibling as a beneficiary to get separate coverage. Previously,
beneficiaries had to be a spouse, child or grandchild. The rules on
joint accounts have been simplified. A co-owner’s interest in all
joint accounts in the same credit union will be added together and
insured up to the SMSIA.
The federal insurance fund has several programs to help insured
credit unions which may be experiencing problems. Liquidations or
failures are a last resort. If a federally insured credit union does
fail; however, the NCUSIF will make any necessary payouts to the
credit union’s members. These payouts are usually done within 3 days
from the time the credit union closes its doors.
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Additional NCUA Insurance Information
Your
Share Insurance
Explained
Tools for understanding
and estimating your insured funds
Share Insurance
Estimator |
