Share Insurance (Ch. 2) Flashcards
What is the current standard maximum share insurance amount (SMSIA) level?
$250k (as of 2008)
What are the different types of accounts for share insurance coverage purposes? Can an account be more than one type of account?
Types of accounts:
- Single ownership
- Joint ownership
- Revocable Trusts
- Irrevocable Trusts
- IRAs, Roth IRAs, and Keogh accounts
- Business Accounts
- Executor or administrator accounts
- Guardian or Custodial accounts
- Fiduciary accounts
A member’s account can only be one account ownership type at a time (a member’s account can only fit into one “bucket” at a time).
When is an account considered a revocable trust?
The member must intend the funds to be passed on to one or more beneficiaries upon his or her death. Evidence of this intent must be reflected in the account title or in the account records.
What are the main aspects of a joint account and how does each joint owner receive share insurance coverage?
- Each of the co-owners must have personally signed a membership or account signature card
- Each of the co-owners must have a right of withdrawal on the same basis as the other co-owners
- Coverage is applied to each owner’s interest in the account up to $250,000
How long does share insurance coverage apply after the death of a member?
Up to 6 months after the member’s death
How is insurance coverage determined for a revocable trust? A joint revocable trust?
Revocable Trust: Coverage will be based on the number of beneficiaries
Joint Revocable Trust: Both owners share insurance coverage for any named beneficiaries. Basic formula is the number of owners multiplied by the number of beneficiaries, then multiplied by $250K
If a member has an IRA and a Roth IRA at your credit union, is the member’s insurance
coverage a combined $250,000 or $250,000 for each account ($500,000 total)?
- Combined $250k for IRA and Roth IRA accounts
- Keogh is available for separate coverage
What are the share insurance coverage rules for business accounts?
- Applies to corporations, partnerships, and unincorporated associations
- Business must be engaged in independent activity (an activity other than the one directed solely at increasing insurance coverage
- Sole proprietorships are insured as individual accounts
How is share insurance coverage determined in the event of a merger? How long is the grace period?
If a member has accounts at both credit unions involved, the member’s share insurance coverage will be separate for up to 6 months.
6-month grace period after the merger of credit unions.
