If you’re a member of a credit union, chances are you’ve seen something like “your funds are federally insured for $250,000.” But what does that really mean? Are your funds actually insured, and for how much? The simple answers are “yes, and $250,000,” but when we look a little deeper, the answer becomes more nuanced. To make sure your funds are insured, read our quick guide below.
Understanding the NCUSIF
NCUSIF stands for the National Credit Union Share Insurance Fund. It was created by Congress in 1970, and it protects credit union members’ deposits within federally insured credit unions in the unlikely event a credit union should fail. NCUSIF covers the balance of each member’s account, dollar-for-dollar up to the insurance limit, including principal and posted dividends through the date of the failure.
The NCUSIF insures all types of deposits received by a credit union in its usual course of business. For example, savings accounts, share draft (checking) accounts, money market accounts, and share certificates (certificates of deposit “CDs”) are all insured by the NCUSIF.
How much does the NCUSIF insure?
If your funds are in a federally insured credit union deposit account, then they are insured for the full $250,000. The basic insurance amount is $250,000 per individual account holder, per federally insured credit union. However, this is where some math can come into play.
Say you are on a joint account with one other person. Then BOTH account holders are insured for the maximum of $250,000, totaling $500,000. Keep in mind that this is separate from your solo accounts.
What NCUSIF DOESN’T Cover
The NCUSIF does not insure the money individuals invest in stocks, bonds, municipal bonds, or other securities such as mutual funds (including money market mutual funds, and mutual funds that invest in stocks, bonds and other securities); annuities (which are contracts underwritten by insurance companies that guarantee income in exchange for a lump sum or periodic payment); or insurance products such as automobile and life insurance, even if these products were purchased at a federally insured credit union or through an affiliated broker/dealer/insurance agent that is offering these products on behalf of a federally insured credit union.
The NCUSIF does not insure U.S. Treasury bills, bonds, or notes, but these are backed by the full faith and credit of the U.S. Government.
Also, the NCUSIF doesn’t cover valuables in safe-deposit boxes. These contents, however, may be covered by a box holder’s personal homeowner’s insurance.
Can my coverage be increased?
If you are looking to increase your coverage, there are a few ways you can.
First, you can have deposits at multiple federally insured credit unions. Each deposit will be insured for the maximum amount of $250,000.
Another option is having multiple accounts at a single credit union among different ownership categories. The four most common categories are: single owner accounts, retirement accounts, joint accounts, and revocable trust accounts.
When it comes to Share Insurance Coverage, like any other insurance policy, there can be a lot of jargon and minutiae that can make understanding things difficult. If you ever have any questions, don’t hesitate to contact us via our website or give us a call at 800.336.6309.
For more resources, visit our website, where we go more in-depth on Share Insurance Coverage. You can also visit the NCUA website, where they offer videos and Share Insurance Calculators.
Each individual’s financial situation is unique, and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed
