Compliance Blog

Yesterday, I heard from even more credit unions who are getting hammered with questions about share insurance.  With that in mind, I wanted to touch upon two issues that seem to be generating some confusion.

1. The National Credit Union Share Insurance Fund (NCUSIF) insures different types of accounts separately in each institution.  If a member, for example, has an individual account and is a joint owner on a joint account, these two accounts offer separate share insurance protection up to $100K.  (Some retirement accounts get up to $250K.)  So, it is very easy for a member to get $200K of coverage by having an individual account and a joint account.  But a member cannot multiply his or her coverage by opening multiple accounts of the same type at the same credit union .  For an example, a member could have 20 different individual accounts in a credit union. His or her interest in all individual accounts at an institution is insured up to $100K.  So one individual account or 20 at the same institution is all the same when it comes to share insurance.
   
2. NCUA treats POD accounts as an informal revocable trust account.  This means that every owner of of a POD/revocable trust account gains $100K of share insurance for each qualifying beneficiary of the account(s).  Qualifying beneficiaries are spouses, children, grandchildren, parents, and siblings of the account owner.  Note that NCUA strongly suggests that credit unions to include POD or trust designation on the account title. (The actual requirement is that the account records should show the account owner's intent that funds pass on to a beneficiary upon his or her death.)

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The rumors were true. Next Friday, July 25, NAFCU will host a free webcast for NAFCU members and nonmembers to go over the fundamentals of share insurance.  It will take place from 2-3:30 EST.  With all the questions from members, we thought now would be a great time to do this.  Members and nonmembers can sign up here. The webcast will be archived and available for 6 months following the airing.  If you are going to have more than one location watch, we ask that each location sign up separately.

Over and out.  Have a great weekend everyone!