Suze Orman Helps Consumers Understand Deposit Insurance.
The National Credit Union Administration (NCUA) has teamed with Suze Orman, internationally acclaimed personal financial expert, to produce a public service announcement (PSA) highlighting that NCUA and FDIC are virtually identical in providing financial security for member deposits. Visit http://www.ncua.gov/NCUAsafe.aspx and find out the details.
At Missouri Credit Union your deposits are insured up to $500,000! Here’s how we accomplish that important goal:
- The National Credit Union Share Insurance Fund (NCUSIF) is the federal fund created by Congress in 1970 to insure member's deposits in federally insured credit unions. The insurance limit was permanently increased to $250,000 per individual depositor on September 17, 2010. Administered by the National Credit Union Administration, the NCUSIF is backed by the "full faith and credit" of the U.S. Government.
- Your MCU Board of Directors also has chosen to provide an additional $250,000 of savings coverage to qualifying accounts through ESI, a licensed property and casualty insurance company. This supplemental share insurance coverage from ESI has been available to all credit unions since 1993. We are proud to say that MCU is the only credit union in central Missouri to offer this additional coverage to its members!
Let’s look at an example of how NCUA and ESI insurance work together. For example, if a member has a savings account, checking account, and a certificate of deposit at MCU that when added together total $440,000 … $250,000 is insured by the NCUA with the remaining insured by ESI. Deposit insurance is provided on a dollar-for-dollar basis and is payable only upon the failure and liquidation of the credit union.
Also, previous legislation that increased NCUSIF coverage for retirement accounts has a provision for potential increases in the insurance limits on all share accounts, including retirement accounts, every five years. This process will begin in 2011. Changes, if they occur at all will be based, in part, on inflation. Joint, individual, retirement, and certain other account relationships are insured separately and are subject to other federal guidelines regarding insurance. For details about coverage on these accounts, or how you can possibly structure your accounts to qualify for additional NCUA coverage, please see your personal financial officer. A brochure entitled Your Insured Funds is available at NCUA's Internet site. This comprehensive brochure contains a detailed discussion of all available types of coverage offered by the NCUSIF, along with examples illustrating how the coverage actually works in practice.
Members exceeding the maximum level of coverage provided by the NCUA also are insured up to an additional $250,000 by ESI. For example, if a member has a savings account, checking account and a certificate of deposit at MCU that when added together total $440,000 … $250,000 is insured by the NCUA with the remaining insured by ESI. Deposit insurance is provided on a dollar-for-dollar basis and is payable only upon the failure and liquidation of the credit union.
The Excess Share Insurance Corporation is a subsidiary of the American Share Insurance, the nation’s largest private deposit insurer for credit unions, and is headquartered in Dublin, Ohio. To operate in this state, the company was required to file with, and receive authorization from, the state’s department of insurance. Furthermore, ESI is required to file periodic reports and undergo regular review from the state to assure its compliance with statutes and regulations. The corporation is also subjected to an annual examination by a nationally recognized auditing firm, and an actuarial assessment of its reserves for losses by an independent actuary.
The company operates throughout the U.S.A. and has taken great care to maximize the geographical and occupational diversity within its insured credit unions. Excess share insurance is available only to credit unions meeting the company’s rigid underwriting requirements. To be eligible for, and to secure this coverage, MCU is required to be routinely reviewed by the company and must comply with their standards of performance.
Information regarding your deposit insurance coverage can be obtained by contacting your MCU personal financial officer. You may also visit the ESI website at www.excessshare.com
The National Credit Union Share Insurance Fund (NCUSIF), an arm of NCUA, insures the shares in your credit union. Established by Congress in 1970 to insure member share accounts at federally insured credit unions, the NCUSIF is managed by NCUA under the direction of the three-person NCUA Board. Your share insurance is similar to the deposit insurance protection offered by the Federal Deposit Insurance Corporation (FDIC).
Credit unions that are insured by the NCUSIF must display in their offices the official NCUA insurance sign which appears on the homepage of this web site. All federal credit unions must be insured by NCUA, and no credit union may terminate its federal insurance without first notifying its members.
Here are some important facts to remember about your share insurance:
- Not one penny of insured savings has ever been lost by a member of a federally insured credit union. 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.
- As a member of an insured credit union, you do not pay directly for your share insurance protection. Your credit union pays into the NCUSIF a deposit, and an insurance assessment, based on the total amount of insured shares and deposits in the credit union. Insured credit unions are required to deposit and maintain one percent of their insured shares and deposits in the NCUSIF. The NCUSIF is backed by the full faith and credit of the United States government.
- Most properly established share accounts in federally insured credit unions are insured up to the Standard Maximum Share Insurance Amount (SMSIA), which is $250,000 as of October 2008 but may be increased in the future. Recent legislation has 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 though. 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 savings account and an Individual Retirement Account (IRA) at the same credit union, the regular savings account is insured up to $250,000 and the IRA is separately insured up to $250,000. However, if you have a regular savings account, a certificate of deposit, and a checking account, all in your own name, you will not have additional coverage. Those accounts will be added together and insured up to $250,000 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. 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.
Information regarding your deposit insurance coverage can be obtained by contacting your MCU personal financial officer. You may also visit the NCUA website at www.ncua.gov