ARE YOU COVERED?

How NCUA insurance coverage works for your accounts

 

We all want the security of knowing our accounts are fully insured.  Supplying that security is very important to our board of directors.  The purpose of this article is to show how multiple account ownerships can dramatically increase your insurance coverage.

Your accounts at Citizens Community Credit Union are federally insured by the National Credit Union Administration (NCUA).  For most account owners, the NCUA limit of $100,000 is enough.  For those needing more coverage, separate ownership of accounts provides a convenient solution.

Ownership simply means how funds are held and how the account is titled.  For example, an individual account is one form of ownership and a joint account is another.  Many people already have several different account ownerships with us--enjoying the benefits of convenience and security.  When accounts are held in separate ownerships, each can be insured separately.  This means you can multiply the basic $100,000 amount you have in accounts with us and still be fully insured!

To help you understand how it works, here are some of the types of account ownerships:

Individual Account:  Funds are owned by one individual and the account is in that person's name only.  A person can have a combined total of $100,000 in one or more individual accounts with us and be fully insured. Joint Account:  This type of account is in the names of two or more persons and all owners have equal rights of withdrawal.  These accounts usually, but not necessarily, have survivorship rights.  Generally, each joint tenant is attributed an equal share in each joint account to which that person participates and each joint tenant is insured to $100,000.
Revocable Trust Accounts:  The owner of the funds designates a person (beneficiary) to receive the funds in the event the owner dies.  The owner retains complete control of the account and funds while alive and is insured for up to $100,000 for each qualifying beneficiary (spouse, child, grandchild, parent, or sibling of the the owner, including 'step' variations of the latter four).   Traditional or Roth Individual Retirement Account (IRA):  This type of retirement account is a custodial or trust account established exclusively for the individual and his/her beneficiaries.  To be separately insured, the account must qualify as an IRA under the Internal Revenue Code.  A person's funds held in Traditional or Roth IRAs at CCCU are added together and insured up to a maximum of $250,000.

Here is a sample profile to illustrate how these personal ownerships work.

Husband, Wife and two Children with insured accounts totaling $3,000,000

Individual Accounts:

Husband $100,000
Wife  100,000
Child 1  100,000
Child 2  100,000

Joint Accounts:

Husband, Wife, Child 1, and Child 2          $400,000

Revocable Trust Accounts:

Husband in Trust for Wife, Child 1,            $300,000
     and Child 2
Wife in Trust for Husband, Child 1,             300,000
     and Child 2
Child 1 in Trust for Wife, Husband              300,000
     and Child 2
Child 2 in Trust for Wife, Husband              300,000
     and Child 1

Individual Retirement Accounts: 

Husband $250,000
Wife  250,000
Child 1 250,000
Child 2 250,000

Total Insurance Coverage                   $3,000,000

More About Insured Accounts

All CCCU accounts owned by the same person(s) in the same ownership category are treated as one account for insurance purposes.  Thus, merely opening a number of accounts does not by itself increase account insurance.  The ownerships must be different as well.

For example, if the same person opens an individual checking account with $100,000 and an individual Certificate of Deposit worth $100,000, the balances are combined and insured only up to $100,000.

The sample profile we used is one simple example of what you can do, not necessarily what you should do.  There are many possibilities, and your situation may require a different approach.

If you have questions about how separate ownerships work, please Contact us.

 

 

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