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
  • Written By
    Terry Turner

    Terry Turner

    Senior Financial Writer and Financial Wellness Facilitator

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

    Read More
  • Edited By
    Savannah Hanson
    Savannah Hanson, financial editor for

    Savannah Hanson

    Senior Financial Editor

    Savannah Hanson is an accomplished writer, editor and content marketer. She joined as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

    Read More
  • Financially Reviewed By
    Timothy Li, MBA
    Timothy Li, MBA Headshot

    Timothy Li, MBA

    Business Finance Manager

    Timothy Li, MBA, has dedicated his career to increasing profitability for his clients, including Fortune 500 companies. Timothy currently serves as a business finance manager where he researches ways to increase profitability within the supply chain, logistics and sales departments.

    Read More
  • Updated: May 5, 2023
  • 5 min read time
  • This page features 8 Cited Research Articles
Fact Checked
Fact Checked partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

Cite Us
How to Cite's Article

APA Turner, T. (2023, May 5). State Guaranty Associations. Retrieved June 8, 2023, from

MLA Turner, Terry. "State Guaranty Associations.", 5 May 2023,

Chicago Turner, Terry. "State Guaranty Associations." Last modified May 5, 2023.

Why Trust
Why You Can Trust has provided reliable, accurate financial information to consumers since 2013. We adhere to ethical journalism practices, including presenting honest, unbiased information that follows Associated Press style guidelines and reporting facts from reliable, attributed sources. Our objective is to deliver the most comprehensive explanation of annuities and financial literacy topics using plain, straightforward language.

Our Partnerships, Vision and Goals

We pride ourselves on partnering with professionals like those from Senior Market Sales (SMS) — a market leader with over 30 years of experience in the insurance industry — who offer personalized retirement solutions for consumers across the country. Our relationships with partners including SMS and Insuractive, the company’s consumer-facing branch, allow us to facilitate the sale of annuities and other retirement-oriented financial products to consumers who are looking to purchase safe and reliable solutions to fill gaps in their retirement income. We are compensated when we produce legitimate inquiries, and that compensation helps make an even stronger resource for our audience. We may also, at times, sell lead data to partners in our network in order to best connect consumers to the information they request. Readers are in no way obligated to use our partners’ services to access the free resources on carefully selects partners who share a common goal of educating consumers and helping them select the most appropriate product for their unique financial and lifestyle goals. Our network of advisors will never recommend products that are not right for the consumer, nor will Additionally, operates independently of its partners and has complete editorial control over the information we publish.

Our vision is to provide users with the highest quality information possible about their financial options and empower them to make informed decisions based on their unique needs.

Key Takeaways

  • State guaranty associations protect annuity owners if the issuing insurance company becomes insolvent.
  • The individual states regulate insurance companies, and all 50 states along with the District of Columbia and Puerto Rico have their own state guaranty associations.
  • Most states have two guaranty associations — one covering life and health insurance and another covering property and casualty policies.
  • Each state sets its own limits on annuity coverage. Most states have annuity coverage limits of $250,000.

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

Source: American Council of Life Insurers

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.

Interested in Buying an Annuity?

Learn about the different types of annuities and find out which one is right for you.

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.

Policyholder Protection: Annuity Benefit Limits
80% of the annuity contract value up to
a $250,000 limit
District of Columbia
$250,000 (if the annuity is deferred) or
$300,000 (if the annuity is in payout status)
$250,000 (if the annuity is deferred) or
$300,000 (if the annuity is in payout status)
$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
New Hampshire
New Jersey
$100,000 (if the annuity is deferred) or
$500,000 (if the annuity is in payout status)
New Mexico
New York
North Carolina
$300,000 for most annuities with an exception of
$1,000,000 for structured settlement annuities
North Dakota
Rhode Island
South Carolina
South Dakota
West Virginia
$250,000 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.

FAQs Surrounding State Guaranty Associations

What happens to my annuity if the insurance company fails?

State guaranty associations provide some degree of safety in the unlikely event that your insurance carrier fails. Receiving a payout can take weeks or months after a company’s failure, and there are limits on how much the guaranty association will cover.

What is the difference between state guaranty associations and FDIC insurance?

The FDIC is an independent federal agency that provides deposit insurance for bank deposits. State guaranty associations are nonprofit organizations that operate at the state level to protect insurance policyholders.

Are secondary annuities covered by the state guaranty association?

State guaranty associations only cover directly issued annuities. They do not cover secondary market annuities. SMAs are often the result of a lump sum sale of structured settlements or lottery winnings.


Connect With a Financial Advisor Instantly

Our free tool can help you find an advisor who serves your needs. Get matched with a financial advisor who fits your unique criteria. Once you’ve been matched, consult for free with no obligation.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: May 5, 2023

8 Cited Research Articles 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
  2. National Organization of Life & Health Insurance Guaranty Associations. (2021, April 23). Benefit Limits. Retrieved from
  3. National Association for Fixed Annuities. (2019, December 30). Suitability in Annuity Transactions Model Regulation. Retrieved from
  4. National Association of Insurance Commissioners. (2019, January 7). Guaranty Associations. Retrieved from
  5. National Association of Insurance Commissioners. (2007, October). Insurer Receivership Model Act. Retrieved from
  6. American Council of Life Insurers. (n.d.). Guaranty Associations. Retrieved from
  7. American Council of Life Insurers. (n.d.). Guaranty Associations. Retrieved from
  8. National Association for Fixed Annuities. (n.d.). State Guaranty Fund Overview and Directory. Retrieved from