State Guaranty Associations

Annuities are regulated and protected by nonprofit insurance guaranty associations at the state level. These state guaranty associations will pay claimants in the unlikely event that an insurance company becomes insolvent and cannot pay. Coverage is limited and varies by state. The typical statutory coverage limit is $250,000.

Terry Turner, Financial writer for Annuity.org
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    Terry Turner

    Terry Turner

    Senior Financial Writer and Financial Wellness Facilitator

    Terry Turner is a senior financial writer for Annuity.org. He holds a financial wellness facilitator certificate from the Financial Wellness Foundation and the National Wellness Institute, and he is an active member of the Association for Financial Counseling & Planning Education (AFCPE®).

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  • Updated: September 6, 2022
  • This page features 8 Cited Research Articles
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APA Turner, T. (2022, September 6). State Guaranty Associations. Annuity.org. Retrieved October 3, 2022, from https://www.annuity.org/annuities/regulations/state-guaranty-associations/

MLA Turner, Terry. "State Guaranty Associations." Annuity.org, 6 Sep 2022, https://www.annuity.org/annuities/regulations/state-guaranty-associations/.

Chicago Turner, Terry. "State Guaranty Associations." Annuity.org. Last modified September 6, 2022. https://www.annuity.org/annuities/regulations/state-guaranty-associations/.

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What Are State Guaranty Associations?

State guaranty associations act as a safety net to protect policyholders if the insurance company that issued an annuity or other insurance policy has insufficient assets and cannot meet its financial obligations.

This protection works similarly to how the Federal Deposit Insurance Corporation (FDIC) protects bank funds up to a maximum amount in the event of insolvency. But unlike the FDIC, insurance guaranty associations are nonprofit organizations and — since insurance companies are not federally regulated — operate at the state level.

All 50 states, plus the District of Columbia and Puerto Rico, have their own insurance guaranty associations. Any company selling insurance policies or annuities is required to belong to the state guaranty association in each state where they do business.

Most states operate at least two separate guaranty associations — one for covering life and health insurance products and a distinct entity for property and casualty products.

Insurance products covered by state guaranty associations include:
  • Annuities
  • Disability income insurance
  • Group life insurance
  • Individual life insurance
  • Long-term care insurance

The state’s insurance commissioner and an appointed board of directors typically govern state guaranty associations.

Chris Magnussen, licensed insurance agent, explains how State Guaranty Associations help guarantee an annuity over the life of the contract.

How Do Guaranty Associations Work?

If an insurance company becomes insolvent — meaning it can’t afford to pay its obligations — the state guaranty association levies an assessment against all the other companies selling the same type of annuity or insurance product.

The money raised from this levy — along with the failed company’s remaining assets — is used to pay customer claims against the failed insurer up to the limit set by each state’s law. These limits vary by state.

This coverage may not be necessary because often when an insurance company becomes insolvent, the company’s contracts are purchased by other insurance companies. When this happens, customers still have the same insurance and annuity contracts worth the same amount of money — but from different companies.

Every state guaranty association may also voluntarily join the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). NOLHGA raises funds from its members to pay claims to policyholders if an insolvent insurer does business in multiple states and becomes unable to pay the claims themselves.

While each state has its own guaranty laws and limits, all are based on a model act drafted by NOLHGA in 1971 and updated several times since. This provides core protections across the U.S., but allows states to provide more protections if they so choose.

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Limits on Annuity Coverage

Each state defines its own limits — set through state laws — on the maximum amount of coverage.

Every state plus the District of Columbia guarantees total annuity coverage of up to at least $250,000 in the event of an insurer’s insolvency. The limit in Puerto Rico is $100,000.

State
Policyholder Protection: Annuity Benefit Limits
Alabama
$250,000
Alaska
$250,000
Arizona
$250,000
Arkansas
$300,000
California
80% of the annuity contract value up to a $250,000 limit
Connecticut
$500,000
Delaware
$250,000
District of Columbia
$300,000
Florida
$250,000 (if the annuity is deferred) or $300,000 (if the annuity is in payout status)
Georgia
$250,000 (if the annuity is deferred) or $300,000 (if the annuity is in payout status)
Hawaii
$250,000
Idaho
$250,000
Illinois
$250,000
Indiana
$250,000
Iowa
$250,000
Kansas
$250,000
Kentucky
$250,000
Louisiana
$250,000
Maine
$250,000
Maryland
$250,000
Massachusetts
$250,000
Michigan
$250,000
Minnesota
$250,000 in most cases, or up to $410,000 for structured settlements and for annuities that have been annuitized for not less than lifetime or for a period certain not less than 10 years
Mississippi
$250,000
Missouri
$250,000
Montana
$250,000
Nebraska
$250,000
Nevada
$250,000
New Hampshire
$250,000
New Jersey
$100,000 (if the annuity is deferred) or $500,000 (if the annuity is in payout status)
New Mexico
$250,000
New York
$500,000
North Carolina
$300,000 for most annuities with an exception of $1,000,000 for structured settlement annuities
North Dakota
$250,000
Ohio
$250,000
Oregon
$250,000
Oklahoma
$300,000
Pennsylvania
$250,000
Rhode Island
$250,000
South Carolina
$300,000
South Dakota
$250,000
Tennessee
$250,000
Texas
$250,000
Utah
$250,000
Vermont
$250,000
Virginia
$250,000
Washington
$500,000
West Virginia
$250,000
Wisconsin
$300,000
Wyoming
$250,000
Annuity.org compiled the above data from information made publicly available in “The Nation’s Safety Net” published by NOLHGA on January 1, 2022. The above protection limits apply to individual annuity contracts or group annuity certificates issued to and owned by an individual or under which the insurer guarantees annuity benefits to an individual under the contract. These protections are subject to applicable limits and exclusions on coverage.

You can check your state’s specific laws on overall coverage limits at the National Organization of Life and Health Insurance Guaranty Associations website.

To ensure you receive all your annuity benefits, it’s wise to investigate the annuity company’s ratings before making an annuity purchase. If you plan on purchasing annuities worth more than your state guaranty association limits, ‌consider purchasing multiple annuities from different companies to avoid exceeding the guaranty limits on a single annuity.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: September 6, 2022

8 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. National Organization of Life & Health Insurance Guaranty Associations. (2022). The Nation’s Safety Net. Retrieved from https://www.nolhga.com/resource/code/file.cfm?ID=2515
  2. National Organization of Life & Health Insurance Guaranty Associations. (2021, April 23). Benefit Limits. Retrieved from https://www.nolhga.com/factsandfigures/main.cfm/location/lawdetail/docid/8
  3. National Association for Fixed Annuities. (2019, December 30). Suitability in Annuity Transactions Model Regulation. Retrieved from https://nafa.com/wp-content/uploads/NAIC-Model-275-8-Approved-02.13.2020.pdf
  4. National Association of Insurance Commissioners. (2019, January 7). Guaranty Associations. Retrieved from https://content.naic.org/cipr_topics/topic_guaranty_associationsfunds.htm
  5. National Association of Insurance Commissioners. (2007, October). Insurer Receivership Model Act. Retrieved from https://content.naic.org/sites/default/files/inline-files/MDL-555.pdf
  6. American Council of Life Insurers. (n.d.). Guaranty Associations. Retrieved from https://www.acli.com/industry-facts/guaranty-associations
  7. American Council of Life Insurers. (n.d.). Guaranty Associations. Retrieved from https://www.acli.com/Industry-Facts/Guaranty-Associations
  8. National Association for Fixed Annuities. (n.d.). State Guaranty Fund Overview and Directory. Retrieved from http://nafa.com/wp/wp-content/uploads/2012/07/State-Guaranty-Fund-Directory.pdf