Get the Most Out of Your NCUA Deposit Insurance Coverage
As a member of a credit union, your deposits are insured by the National Credit Union Administration (NCUA). NCUA insurance safeguards your money up to $250,000 per depositor. While the $250,000 coverage limit may seem sufficient for most members, there are ways to increase your coverage if you have more extensive deposits or want to ensure additional protection. Here’s a look at how you can maximize your NCUA deposit insurance coverage.
Understanding the Coverage Limits
The National Credit Union Share Insurance Fund (NCUSIF) provides insurance coverage of up to $250,000 per depositor, per insured credit union, for each account ownership category. The main account ownership categories include:
- Individual accounts.
- Joint accounts.
- Certain retirement accounts (such as IRAs and Keoghs).
- Trust accounts (see #2 below for more on this category).
It’s good to note that NCUA insures retirement accounts separately from other types of accounts a member might have at the same credit union (such as checking and savings accounts). So, for example, say you individually have a checking account and an IRA. In this case, both accounts would be insured separately for up to $250,000.
Four Ways to Extend Your NCUA Deposit Insurance Coverage
Here are four ways to get the most out of your NCUA insurance coverage.
- Diversify account ownership: You can increase coverage by adding one or more owners to an account. Since every individual depositor is insured up to $250,000 at a given credit union, when you add a joint owner to an account, they too are insured up to $250,000. So, for example, suppose you and your partner become members by opening a joint savings account together. The two of you would have a total coverage of $500,000 (2 x $250,000). If you added a third depositor to the account, they too would be insured up to $250,000, and the total coverage for the account would be $750,000 (3 x $250,000).
- Add beneficiaries: The NCUSIF provides coverage for beneficiaries of both revocable and irrevocable trusts that is separate from the individual coverage available to the trust owner. The simplest way to take advantage of this coverage category is by establishing an informal trust (officially known as an informal revocable trust). Your credit union can establish a common informal trust with some basic information about a beneficiary. All you need to do is add a beneficiary to your account. Here’s how it works: Suppose you have an individual savings account at a credit union. As a depositor, you’re insured up to $250,000. Then you add a beneficiary to this account. Now this account has a total of $500,000 in deposit insurance. You can keep expanding your coverage this way by adding up to five beneficiaries. (When you get over five beneficiaries, different NCUA rules kick in. You can learn more here about deposit insurance on trust accounts with six or more beneficiaries.)
- Split your deposits among multiple credit unions: If you have more than $250,000 in deposits, you can spread your money across several federally insured credit unions. Each credit union will provide separate coverage of up to $250,000, effectively increasing your overall protection.
- Leverage certain retirement accounts: By holding your retirement savings in accounts like IRAs and Keoghs, you can benefit from an additional $250,000 coverage limit specifically for these accounts, separate from your other accounts.
Maximizing Your Share Insurance
See real world examples on how to increase the insurance coverage on you accounts.
NCUA Electronic Share Insurance Estimator
The NCUA Electronic Share Insurance Estimator is available to help members better understand the protection offered by the NCUSIF. This interactive site allows users to input data to compute the amount of NCUSIF coverage available under different account scenarios.