Frequently Asked Questions About NCUA Share Insurance
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 What
is a NCUSIF-insured financial institution?
- Congress established the NCUSIF in 1970 to insure
member share accounts at all federally chartered credit unions and most state
chartered credit unions. NCUSIF insurance is similar to the deposit insurance
protection offered by the Federal Deposit Insurance Corporation (FDIC). The
NCUSIF is managed by NCUA under the direction of the three-person NCUA Board
appointed by the President of the United States
Which
credit unions are insured by NCUSIF?
- NCUSIF insures member shares in all federal
credit unions (FCU) and those federally insured state-chartered credit unions
(FISCU) that apply for and meet the insurance standards. Insured credit unions
are required to indicate their insured status in their advertising and to
display the official NCUSIF insurance sign at their offices. Some state credit
unions are insured by private insurance or guaranty corporations which are
separate and apart from NCUSIF
How
does NCUSIF share insurance protect credit union members against loss?
- Each credit union approved for NCUSIF share
insurance must meet high standards of safety and soundness in its operation.
Adherence to these standards is determined regularly through credit union
examinations by federal and state examiners. If an insured credit union gets
into financial difficulties and must be closed, the NCUSIF acts immediately to
protect each members share account
Does
NCUSIF share insurance protection apply only if a credit union is liquidated?
- No. Liquidation is the only situation in which a
member is directly provided share insurance protection by the payment of a check
for his or her insured savings. However, indirect protection is provided when
the NCUA Board, through the NCUSIF, authorizes financial assistance to a credit
union to enable it to overcome a temporary financial setback. In a case where a
credit union is unable to overcome its difficulty, financial assistance may be
authorized to accomplish a merger that protects the continuing credit union from
loss and provides continued credit union service to the members of the merging
credit union
How
does NCUSIF pay members their shares when an insured credit union is liquidated?
- Checks for each members shares (less any amounts
due on outstanding loans) up to the insurance limit are mailed to the members
last known address as shown in the records of the credit union. These checks are
usually mailed several days after the credit union is placed into liquidation.
In situations where on-site payment is more convenient, the NCUA liquidation
team will give checks directly to members
What
happens to the members share account when an insured credit union is merged
into another insured credit union?
- Each members share account is transferred to the
continuing credit union. Accrued dividend credit is also transferred. On the
effective date of the merger, each merging credit union member has full
membership rights to all the financial services provided by the continuing
credit union
Does
NCUSIF share insurance protect the interest of creditors?
- No. NCUSIF share insurance protects only credit
union members
If
a member has more than one individual account in the same insured credit union,
is each account insured to $100,000 SMSIA?
- No. Individual share accounts held by the same
member are added together and are insured up to $100,000 SMSIA. An individual
share account is an account solely owned by one individual without the right of
withdrawal by another individual. IRA, Keogh, and Deferred Compensation accounts
are insured separately. See the section on NCUSIF Insurance of Special Accounts
for more details
What
types of joint accounts may be insured?
- NCUSIF share insurance covers joint accounts
owned in any manner conforming with applicable state law such as joint tenants
with a right of survivorship, tenants by the entireties, tenants in common, or
an account owned by a husband and wife as community property in states
recognizing this particular form of joint ownership
If
two or more persons, such as husband and wife, have a joint account in the same
credit union as well as their own individual accounts, is each account
separately insured?
- Yes. A persons interests in joint accounts are
insured separately from individual accounts up to the $100,000 SMSIA, provided
that each of the co-owners has personally signed an account signature card and
has a right of withdrawal on the same basis as the other co-owners. (If state
law limits a minors right of withdrawal, the account will still be insured as a
joint account. The signature of each co-owner is not required on a share
certificate.). However, the insurance protection for a co-owner on joint
accounts is not increased by rearranging the names of the owners, changing the
style of names, or by establishing more than one joint account.The interests
that a particular co-owner has in all joint accounts held in the same credit
union will be added together and insured up to the $100,000 SMSIA
Is
the answer to the question above the same if funds in the individual and joint
accounts of husband and wife all consist of community property?
- Yes. In those jurisdictions recognizing community
property, community funds may be maintained in accounts in the individual names
of each spouse or a joint account in the names of both. The individual account
of the husband and the individual account of the wife will each be insured up to
the $100,000 SMSIA. As co-owners, the interest of the husband and wife in the
joint account will each be insured up to the $100,000 SMSIA
If
a person has an interest in more than one joint account, what is the extent of
the insurance coverage?
- A person holding an interest in more than one
joint account may receive up to the $100,000 SMSIA in insurance coverage on the
total of his/ her interests in all of those joint accounts. For example, assume
that H and W own a joint account containing $110,000 and H and C own a joint
account containing $50,000. Since the interests of the co-owners of a joint
account are deemed equal for insurance purposes (except in the case of a tenancy
in common if unequal interests are shown on the account records of the credit
union), H has an interest of $55,000 in the account with W, and an interest of
$25,000 in the account with C. H would have insurance of $80,000. W would have
insurance of $55,000 and C would have insurance of $25,000. In this example, all
of the funds held in the two joint accounts would be insured
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NCUA Account Descriptions
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Single
Ownership Accounts
- All funds owned by an individual member (or, in a
community property state, by the husband-wife community of which the individual
is a member) and invested by the member in one or more individual accounts are
added together and insured to the $100,000 SMSIA. This is true whether the
accounts are maintained in the name of the individual member owning the funds,
in the name of the members agent or nominee, or in a custodial loan account on
behalf of the member as a borrower. All such accounts are added together and
insured as one individual account. Funds held in one or more accounts in the
name of a guardian, custodian, or conservator for the benefit of a ward or minor
are added together and insured up to the $100,000 SMSIA. However, such an
account or accounts will not be added to any other individual accounts of the
guardian, custodian, conservator, ward, or minor for purposes of determining
insurance coverage
Joint
Accounts
- The interest of a co-owner in all accounts held
under any form of joint ownership valid under state law (whether as joint
tenants with right of survivorship, tenants by the entireties, tenants in
common, or by husband and wife as community property) is insured up to the
$100,000 SMSIA. This insurance is separate from that afforded by individual
accounts held by any of the co-owners
- An account is insured as a joint account only if
each of the co-owners has personally signed a membership card or an account
signature card and possesses the same withdrawal rights as the other co-owners.
(The signature requirement does not apply to share certificates, or to any
accounts maintained by an agent, nominee, guardian, custodian or conservator on
behalf of two or more persons. However, the records of the credit union must
show that the account is being maintained for joint owners. There is also
another exception in the case of a minor discussed below.) An account owned
jointly which does not qualify as a joint account for insurance purposes is
insured as if owned by the named persons as individuals. In that case, the
actual ownership interest in the account of each person is added to any other
accounts individually owned by such person and insured up to the $100,000 SMSIA
in the aggregate
- Any individual, including a minor, may be a
co-owner of a joint account. Although, generally, each co-owner must have signed
an account signature card and must have the same rights of withdrawal as other
co-owners in order for the account to qualify for separate joint account
insurance, there is an exception for minors. If state law limits or restricts a
minors withdrawal rights for example, a minimum age requirement to make a
withdrawal the account will still be insured as a joint account
- The interests of a co-owner in all joint accounts
that qualify for separate insurance coverage are insured up to the $100,000
SMSIA. For insurance purposes, the co-owners of any joint account are deemed to
have equal interests in the account, except in the case of a tenancy in common.
With a tenancy in common, equal interests are presumed unless otherwise stated
on the records of the credit union
Trust
and Retirement Accounts
- A trust estate is the interest of a beneficiary
in an irrevocable express trust, whether created by trust instrument or statute
that is valid under state law. Thus, funds invested in an account by a trustee
under an irrevocable express trust are insured on the basis of the beneficial
interest under such trust. The interest of each beneficiary in an account (or
accounts) established under such a trust arrangement is insured to the $100,000
SMSIA separately from other accounts held by the trustee, the settlor (grantor),
or the beneficiary. However, in cases where a beneficiary has an interest in
more than one trust arrangement created by the same settlor, the interests of
the beneficiary in all accounts established under such trusts are added together
for insurance purposes, and the beneficiarys aggregate interest derived from
the same settlor is separately insured to the $100,000 SMSIA
- A beneficiarys interest in an account
established pursuant to an irrevocable express trust arrangement is insured
separately from other beneficial interests (trust estates) invested in the same
account if the value of the beneficiarys interest (trust estate) can be
determined (as of the date of a credit unions insolvency) without evaluation of
contingencies except for those covered by the present worth tables and rules of
calculation for their use set forth in Section 20.2031-10 of the Federal Estate
Tax Regulations (26 C.F.R. 20-2031-10). If any trust estates in such an account
cannot be so determined, the insurance with respect to all such trust estates
together shall not exceed the $100,000 SMSIA. In order for the insurance
coverage of a trust account to be effective in accordance with the foregoing
rules, certain record keeping requirements must be met. In connection with each
trust account, the credit unions records must indicate the name of both the
settlor and the trustee of the trust and must contain an account signature card
executed by the trustee indicating the fiduciary capacity of the trustee. In
addition, the interests of the beneficiaries under the trust must be
ascertainable from the records of either the credit union or the trustee, and
the settlor or beneficiary must be a member of the credit union. If there are
two or more settlors or beneficiaries, then either all the settlors or all the
beneficiaries must be members of the credit union
- Although each ascertainable trust estate is
separately insured, it should be noted that in short-term trusts the insurable
interest or interests may be very small, since the interests are computed only
for the duration of the trust. Thus, if a trust is made irrevocable for a
specified period of time, the beneficial interest will be calculated in terms of
the length of time stated. A reversionary interest retained by the settlor is
treated in the same manner as an individual account of the settlor
- As stated, the trust must be valid under local
law. A trust which does not meet local requirements, such as one imposing no
duties on the trustee or conveying no interest to the beneficiary, is of no
effect for insurance purposes. An account in which such funds are invested is
considered to be an individual account. An account established pursuant to a
revocable trust arrangement is insured as a form of individual account and is
treated under Section B, supra, dealing with Testamentary Accounts
- Traditional IRA and Roth IRA accounts are
combined and insured up to $250,000, separately from Keogh accounts which are
also insured to $250,000. Although credit unions may serve as trustees or
custodians for self-directed traditional IRA, Roth IRA, and Keogh accounts, once
the funds in those accounts are taken out of the credit union, they are no
longer insured
- In the case of an employee retirement fund where
only a portion of the fund is placed in a credit union account, the amount of
insurance available to an individual member/beneficiary on his interest in the
account will be in proportion to his interest in the entire employee retirement
fund. If, for example, the members interest represents ten percent of the
entire plan funds, then he is presumed to have only a ten percent interest in
the plan account. Said another way, if a member has vested interest of $10,000
in a municipal employees retirement plan and the trustee invested 25 percent of
the total plan funds in a credit union, the member would be insured for only
$2,500 on that credit union account. There is an exception, however. The member
would be insured for $10,000 if the trustee can document, through records
maintained in the ordinary course of business, that individual beneficiarys
interest are segregated and the total vested interest of the member was, in
fact, invested in that account
Accounts
Held By Executors or Administrators
SEC_CODE_REF_0090001192884
- All funds belonging to a decedent and invested in
one or more accounts, whether held in the name of the decedent or in the name of
his executor or administrator, are added together and insured to the $100,000
SMSIA. Such funds are insured separately from the individual accounts of any of
the beneficiaries of the estate or of the executor or administrator
Revocable
Trust Accounts
- The term revocable trust account includes a
testamentary account, tentative or Totten trust account, payable-on-death
account, or any similar account which evidences an intention that the funds
shall pass on the death of the owner of the funds to a named beneficiary. If the
named beneficiary is a spouse, child, grandchild, parent, brother or sister of
the owner, the funds in all such accounts are insured for the owner up to
$100,000 SMSIA in the aggregate as to each such beneficiary. If the beneficiary
of such an account is other than the spouse, child, grandchild, parent, brother
or sister of the owner, the funds in the account are, for insurance purposes,
added to any other individual (single ownership) accounts of the owner and
insured up to $100,000 SMSIA in the aggregate
- In the case of a revocable trust account, the
person who holds the power of revocation is deemed to be the owner of the funds
in the account. If a revocable trust account is held in the name of a fiduciary
other than the owner of the funds, any other accounts held by the fiduciary are
insured separately from such revocable trust account
Accounts
Held by Government Depositors
- For insurance purposes, the official custodian of
funds belonging to a public unit, rather than the public unit itself, is insured
as the account holder. All funds belonging to a public unit and invested by the
same custodian in a federally-insured credit union are categorized as either
share draft accounts or share certificate and regular share accounts. If these
accounts are invested in a federally-insured credit union located in the
jurisdiction from which the official custodian derives his authority, then the
share draft accounts will be insured separately from the share certificate and
regular share accounts. Under this circumstance, all share draft accounts are
added together and insured to the $100,000 SMSIA and all share certificate and
regular share accounts are also added together and separately insured up to the
$100,000 SMSIA. If, however, these accounts are invested in a federally-insured
credit union located outside of the jurisdiction from which the official
custodian derives his authority, then insurance coverage is limited to the
$100,000 SMSIA for all accounts regardless of whether they are share draft,
share certificate or regular share accounts. If there is more than one official
custodian for the same public unit, the funds invested by each custodian are
separately insured. If the same person is custodian of funds for more than one
public unit, he is separately insured with respect to the funds of each unit
held by him in properly designated accounts
- For insurance purposes, a political subdivision
is entitled to the same insurance coverage as any other public unit. Political
subdivision includes any subdivision of a public unit or any principal
department of such unit (1) the creation of which has been expressly authorized
by state statute, (2) to which some functions of government have been allocated
by state statute, and (3) to which funds have been allocated by statute or
ordinance for its exclusive use and control
Accounts
Held By a Corporation, Partnership, or Unincorporated Association
- All funds invested in an account or accounts by a
corporation, a partnership, or an unincorporated association engaged in any
independent activity are added together and insured to the $100,000 SMSIA. The
term independent activity means any activity other than the one directed
solely at increasing coverage. If the corporation, partnership, or
unincorporated association is not engaged in an independent activity, any
account held by the entity is insured as if owned by the persons owning or
comprising the entity, and the imputed interest of each such person is added,
for insurance purposes, to any individual account which he maintains
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NCUSIF Insurance of Special Accounts
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What
is the insurance coverage on a trust account held under the provisions of an
irrevocable express trust?
- The trust interest of a beneficiary in a valid
irrevocable trust, including Coverdell Education Savings Accounts, formerly
Education IRAs, if capable of evaluation in accordance with published rules, is
insured up to the $100,000 SMSIA separately from the individual accounts of the
settlor (grantor), trustee, or the beneficiary. Either the settlor or the
beneficiary must be a member to obtain insurance benefits. All trust interests
created by the same settlor (grantor) in the same credit union for the same
beneficiary will be added together and insured in the aggregate to the $100,000
SMSIA
What
is the insurance coverage on a revocable trust account, a tentative or Totten
trust account, a payable-on-death account, or a qualifying living trust
account?
- These accounts, or any similar accounts which
evidence an intention that the funds shall pass on the death of the owner to a
named beneficiary, are considered revocable trust accounts and are insured as a
form of individual account. If the beneficiary is a spouse, child, grandchild,
parent, brother or sister (whether through blood, adoption or by virtue of
remarriage, such as a step-mother) of the owner, the funds in such accounts are
insured for the owner up to a total of the $100,000 SMSIA for each such
beneficiary separately from any other individual accounts of the owner. If the
beneficiary is not one of those listed relatives, the funds in the account that
are attributable to that beneficiary are treated as an individually owned
account of the owner, aggregated with any other individual accounts of the
owner, and insured to the $100,000 SMSIA. In the case of a revocable trust
account, the person who holds the power of revocation is deemed to be the owner
of the funds in the account
What
is the insurance coverage on a joint revocable trust account?
- A joint revocable trust account is a revocable
trust account, as described above, that is established by more than one owner
and held for the benefit of others, some or all of whom are within the described
qualifying degree of kinship. The respective interests of each co-owner held for
the benefit of each qualifying beneficiary will be separately insured up to the
$100,000 SMSIA. The interest of each co-owner will be deemed equal unless
otherwise stated in the share account records of the federally-insured credit
union. Interests held for non-qualifying beneficiaries will be added to the
individual accounts of the co-owners. Where a husband and a wife establish a
revocable trust account naming themselves as the sole beneficiaries, the account
will not be insured as a joint revocable trust account, but will instead be
insured as an ordinary joint account
Is
the interest in an employee benefit account insured any differently than a
members individual account?
- Yes. For insurance purposes, employee benefit
accounts are insured separately. The ascertainable interest of each participant
(if a member of the credit union) in such account is insured to the $100,000
SMSIA separately from other accounts of the member
May
a person receive separate insurance on each of several employee benefit plans
established by the members employer with the same credit union?
- No. If two or more employee benefit plans are
established by an employer for the same individual who is a member of the credit
union, the beneficiarys interest in the two accounts will be added together and
insured up to the $100,000 SMSIA
What
insurance coverage is provided for traditional IRA, Roth IRA, and Keogh
accounts?
- Traditional IRA, Roth IRA and Keogh accounts are
insured separately to $250,000 from other accounts that the member maintains in
the same credit union. However, a members Roth IRA will be added together with
his or her traditional IRA and insured in the aggregate to the maximum of
$250,000. A Keogh account is separately insured from the IRA accounts to
$250,000
Are
accounts held by a person as executor, administrator, guardian, custodian, or in
some other similar fiduciary capacity insured separately from his individual
account?
- Yes. If the records of the credit union indicate
that the person is depositing the funds in a fiduciary capacity, such funds
would be separately insured from the fiduciarys individually owned account.
Funds in accounts held by guardians, conservators, or custodians (whether
court-appointed or not) are also insured separately from other accounts of the
ward
When
an account is designated as held by a person as agent for the true owner of the
funds, how is the account insured?
- The account is insured as an account of the
principal or true owner. The funds in the account are added to any other
individual account owned by the true owner and the total is insured up to a
maximum of $100,000 SMSIA
Is
an account held by a corporation, partnership, or unincorporated association
insured separately from the individual accounts of the stockholders, partners,
or members?
- Yes. If the corporation, partnership, or
unincorporated association has obtained membership in the credit union and is
engaged in an independent activity, its account is separately insured to a total
of $100,000 SMSIA. The term independent activity means an activity other than
one directed solely at increasing insurance coverage
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