NCUA insurance coverage question

[SecondCor521]

Hi all,

I have what I believe is a straightforward question that I think I know the answer to. One other person (at the credit union involved) has given me the same answer. However, I would like to have reassurance from my smart friends on this board that I know the correct answer.

Scenario:

An individual adult opens an savings account at a credit union that is covered under NCUA insurance. A few weeks later, the individual adult adds each of his three children as POD beneficiaries to the savings account.

Question:

After the credit union adds the three beneficiaries to the account, to what amount is the account now insured under NCUA?

2Cor521

[Art G]

National Credit Union Administration - Share Insurance

[SecondCor521]

Art,

Yes, I've read that. I just want someone else to confirm that I am reading it correctly.

2Cor521

[Art G]

My understanding is that each account has its own insurance, so even though you may have many accounts in your name, each should be insured separately. This is only my opinion though.

[SecondCor521]

Art,

Thank you. Your understanding differs from mine, so that is a valuable data point.

Any one else have an answer?

2Cor521

[73ss454]

When I opened my 2 cd's with pen fed they said that even though they are in my name I would be insured up to 400K or 4 cd's. The reason has something to do with the beneficiaries each have 100 K of coverage. This is for me, DW, DS and DD.
Strange how this works but that's the deal as far as I know.

[Art G]

2ndcor.....Here's what it says:

Most properly established share accounts in federally insured credit unions are insured up to the Standard Maximum Share Insurance Amount (SMSIA), which is $100,000 as of April 2006, 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 share account and an Individual Retirement Account (IRA) at the same credit union, the regular share account is insured up to $100,000 and the IRA is separately insured up to $250,000. However, if you have a regular share account, a share certificate, and a share draft account, all in your own name, you will not have additional coverage. Those accounts will be added together and insured up to $100,000 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


I take this to mean that each one of your kids accounts are different. However, I can see where the vagueness would cause you concern.

[SecondCor521]

73ss454,

Thanks, that's a good data point as well.

Art,

Let me clarify: I have only one savings account at this credit union. On that account, I am sending in a form to the CU that will make it so that if I die, any money in that account gets split into thirds and goes directly to my children. It's called a POD ("Payable On Death") beneficiary.

Again, I'm pretty sure I know the answer, but the situation I wish to avoid is putting, say, $300,000 into a single account at this credit union, have the credit union fail, and then find out that I was only covered to $100,000.

2Cor521

[Art G]

In that case I'd say you only are insured up to $100k. Again, I know with bank accounts you can set up more than one account with various names. Isn't there a way to do the same with a CU? If not, I'd definitely have second thoughts.
On the other hand, if you buy three different CD's. I think each would carry their own insurance.

[SecondCor521]

Thanks, Art.

2Cor521