There is obviously an enormous amount of press with regard to the failure or conservatorship of some major financial organizations.We have all heard the names of IndyMac, Fannie Mae (Federal National Mortgage Association), Freddie Mac (Federal Home Loan Mortgage Corporation) and Bear Sterns, but most of the concerns center on the uninsured deposits at these institutions.To help clarify the question of how best to insure your deposits, we have decided to review this most important subject with you in this article.
 There are three major insuring agencies with regard to deposits in financial organizations, the FDIC (Federal Deposit Insurance Corporation), the NCUSIF (National Credit Union Share Insurance Fund), and SIPC (Securities Investor Protection Corporation). The National Credit Union Share Insurance Fund insures a person’s savings up to at least $100,000 – with higher total coverage available if you have a combination of individual, joint, trust, payable-ondeath and other types of accounts; there is also separate insurance coverage of up to $250,000 for individual retirement accounts. In effect, you can increase your insured deposits by varying the ownership of accounts as follows:
MAXIMIZE YOUR NCUA INSURANCE COVERAGE! |
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| Husband, Wife & One Child |
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INDIVIDUAL ACCOUNTS: |
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Husband |
$ 100,000 |
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Wife |
$ 100,000 |
JOINT TENANCY*: |
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Husband & Wife |
$ 200,000 |
REVOCABLE TRUST ACCOUNTS: |
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Husband as Trustee for Wife |
$ 100,000 |
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Wife as Trustee for Husband |
$ 100,000 |
RETIREMENT ACCOUNTS: |
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Husband |
$ 250,000 |
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Wife |
$ 250,000 |
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$ 1,100,000 |
*Joint account with right of survivorship. |
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| Husband, Wife & One Child $1,300,000 |
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INDIVIDUAL ACCOUNTS: |
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Husband |
$ 100,000 |
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Wife |
$ 100,000 |
JOINT TENANCY*: |
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Husband & Wife |
$ 200,000 |
PAYABLE ON DEATH ACCOUNTS (POD): |
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Husband POD Child |
$ 100,000 |
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Wife POD Child |
$ 100,000 |
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Husband POD Wife |
$ 100,000 |
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Wife POD Husband |
$ 100,000 |
RETIREMENT ACCOUNTS: |
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Husband |
$ 250,000 |
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Wife |
$ 250,000 |
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$ 1,300,000 |
*Joint account with right of survivorship. |
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| Husband, Wife & Two Children $1,500,000 |
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INDIVIDUAL ACCOUNTS: |
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Husband |
$ 100,000 |
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Wife |
$ 100,000 |
JOINT TENANCY*: |
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Husband & Wife |
$ 200,000 |
PAYABLE ON DEATH ACCOUNTS (POD): |
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Husband POD Child |
$ 200,000 |
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Wife POD Child |
$ 200,000 |
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Husband POD Wife |
$ 100,000 |
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Wife POD Husband |
$ 100,000 |
RETIREMENT ACCOUNTS: |
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Husband |
$ 250,000 |
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Wife |
$ 250,000 |
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$ 1,500,000 |
| *Joint account with right of survivorship. |
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| Parent & One Child $450,000 |
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INDIVIDUAL ACCOUNTS: |
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Parent |
$ 100,000 |
PAYABLE ON DEATH ACCOUNTS (POD): |
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Parent POD Child |
$ 100,000 |
RETIREMENT ACCOUNTS: |
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Parent |
$ 250,000 |
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$ 450,000 |
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The ownership categories shown above have specific requirements that must be met in order to receive the coverage indicated. Failure to meet these requirements will result in funds being aggregated, and insured to a maximum of $100,000. Information on these requirements should be obtained from the NCUA at the web site. |
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As you can see in the illustration above, you can protect family savings by careful distribution of account ownership. Brochures covering this information are available at our branch offices or can be requested through our Phone Center at (800) 222-8877.
Safe and Sound
With regard to the general safety of any financial institution, one of the major indicators is the “capital ratio”. This ratio reveals the amount of reserves available to weather financial storms. Regulators will generally indicate that a capital ratio of 6% or better indicates a “well capitalized” organization. Financial institutions with ratios of less than 6% are considered either “adequately” or “undercapitalized.” Obviously the sub-prime mortgage portfolios of major banks, as well as the general economy in certain parts of the country, have put a significant strain on many institutions.
Historically credit unions do not deal in sub-prime lending and certainly Paragon Federal has no such loans. Further, Paragon’s capital ratio is close to 8.29%, which makes our institution highly capitalized and puts us in a far better position to weather any economic downturns or major events.While the national economy will impact everyone, the fact that some financial institutions have a much stronger capital reserve base will protect its depositors better than others.
Click Here to download the entire FEDERAL SHARE INSURANCE Brochure
America’s credit unions: Secure, strong with federal insurance, serving as consumers’ safe harbors
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