Frequently Asked Questions About The NCUSIF
Congress established the NCUSIF in 1970 to insure member share accounts at all federally chartered credit unions and most state chartered credit unions. NCUSIF insurance is similar to the deposit insurance protection offered by the Federal Deposit Insurance Corporation (FDIC). The NCUSIF is managed by NCUA under the direction of the three-person NCUA Board appointed by the President of the United States.
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NCUSIF insures member shares in all federal credit unions (FCU) and those federally insured state-chartered credit unions (FISCU) that apply for and meet the insurance standards. Insured credit unions are required to indicate their insured status in their advertising and to display the official NCUSIF insurance sign at their offices. Some state credit unions are insured by private insurance or guaranty corporations which are separate and apart from NCUSIF.
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Each credit union approved for NCUSIF share insurance must meet high standards of safety and soundness in its operation. Adherence to these standards is determined regularly through credit union examinations by federal and state examiners. If an insured credit union gets into financial difficulties and must be closed, the NCUSIF acts immediately to protect each member’s share account.
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No. Liquidation is the only situation in which a member is directly provided share insurance protection by the payment of a check for his or her insured savings. However, indirect protection is provided when the NCUA Board, through the NCUSIF, authorizes financial assistance to a credit union to enable it to overcome a temporary financial setback. In a case where a credit union is unable to overcome its difficulty, financial assistance may be authorized to accomplish a merger that protects the continuing credit union from loss and provides continued credit union service to the members of the merging credit union.
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Checks for each member’s shares (less any amounts due on outstanding loans) up to the insurance limit are mailed to the member’s last known address as shown in the records of the credit union. These checks are usually mailed several days after the credit union is placed into liquidation. In situations where on-site payment is more convenient, the NCUA liquidation team will give checks directly to members.
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Each member’s share account is transferred to the continuing credit union. Accrued dividend credit is also transferred. On the effective date of the merger, each merging credit union member has full membership rights to all the financial services provided by the continuing credit union.
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No. NCUSIF share insurance protects only credit union members.