Let’s look at some scenarios and see what adding joint owners and beneficiaries will do for the combined NCUA and ESI coverage limits.
Scenario 1:
Tom is the sole owner on several deposit accounts with a total balance in excess of the combined NCUA and ESI coverage limit of $500,000.
Account Holder
|
Ownership Balance
|
Maximum NCUA+ESI Coverage
|
Amount Uninsured
|
Tom
|
$600,000
|
$500,000
|
$100,000
|
He adds his son Jack as a joint owner on all of his accounts, and now, because both owners are entitled to $250,000 each of insurance coverage from the NCUA and an additional $250,000 from ESI, the combined balance is insured for up to $1,000,000.
Account Holder
|
Ownership Balance
|
Maximum NCUA+ESI Coverage
|
Amount Uninsured
|
Tom
|
$300,000
|
$500,000
|
$0
|
Jack
|
$300,000
|
$500,000
|
$0
|
Total
|
$600,000
|
$1,000,000
|
$0
|
Scenario 2:
Buck and Sally are joint owners on multiple deposit accounts that total $300,000. Like Tom and Jack in Scenario 1, their accounts are insured for up to $500,000 by the NCUA and an additional $500,000 from ESI.
Account Holder
|
Ownership Balance
|
Maximum NCUA+ESI Coverage
|
Amount Uninsured
|
Buck
|
$150,000
|
$500,000
|
$0
|
Sally
|
$150,000
|
$500,000
|
$0
|
Total
|
$300,000
|
$1,000,000
|
$0
|
However, Sally just learned that she has inherited $1.2 million, and she and Buck want to make sure their deposits will be fully insured.
If they put $1,200,000 into their jointly owned deposit accounts, bringing their total to $1,500,000, they will have maxed out the NCUA and ESI coverage on those accounts at $1,000,000, leaving $500,000 uninsured.
Account Holder
|
Ownership Balance
|
Maximum NCUA+ESI Coverage
|
Amount Uninsured
|
Buck
|
$750,000
|
$500,000
|
$250,000
|
Sally
|
$750,000
|
$500,000
|
$250,000
|
Total
|
$1,500,000
|
$1,000,000
|
$500,000
|
They have four kids, so they open an additional joint account with the $500,000 that is uninsured and name their children as beneficiaries, meaning the new account is covered for up to $2,000,000 ($250,000 for each of the four beneficiaries per joint owner) through the NCUA and an additional $2,000,000 from ESI.
Account Holder
|
Beneficiaries
|
Account Balance
|
Maximum NCUA+ESI Coverage
|
Amount Uninsured
|
Buck
|
Ava, Jane, Joey, Bobby
|
$250,000
|
$2,000,000
|
$0
|
Sally
|
Ava, Jane, Joey, Bobby
|
$250,000
|
$2,000,000
|
$0
|
Total
|
|
$500,000
|
$4,000,000
|
$0
|