State Guaranty Associations

State guaranty associations provide a safety net for those who have bought life or health insurance or an annuity. Like the FDIC for banks but regulated at the state level, guaranty associations cover policies and annuities to state-determined limits.

Christian Simmons, writer and researcher for RetireGuide
  • Written by
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.

    Read More
  • Edited By
    Michael Santiago
    headshot of Michael Santiago

    Michael Santiago

    Senior Financial Editor

    Michael Santiago, a senior financial editor, joined RetireGuide in 2023. With over 10 years of professional writing and editing experience, he brings a wealth of expertise in creating content for diverse industries, including travel and healthcare. Having traveled to more than 40 countries across five continents and lived in Europe and Asia for several years, Michael's global perspective enriches his work. He combines his strong writing skills, editorial judgment and passion for crafting accurate and engrossing content to enhance the user experience on RetireGuide.

    Read More
  • Financially Reviewed By
    Brandon Renfro, Ph.D., CFP®, RICP®, EA
    Brandon Renfro, RetireGuide Reviewer

    Brandon Renfro, Ph.D., CFP®, RICP®, EA

    Retirement and Social Security Expert

    Brandon Renfro is a Retirement and Social Security Expert and financial planner. He focuses on helping clients create a secure financial future in retirement and co-owns Belonging Wealth Management. He is also a former finance professor and writes for several publications.

    Read More
  • Published: June 19, 2023
  • Updated: July 13, 2023
  • 7 min read time
  • This page features 6 Cited Research Articles
Fact Checked
Fact Checked

A qualified expert reviewed the content on this page to ensure it is factually accurate, meets current industry standards and helps readers achieve a better understanding of retirement topics.

Cite Us
How to Cite's Article

APA Simmons, C. (2023, July 13). State Guaranty Associations. Retrieved April 17, 2024, from

MLA Simmons, Christian. "State Guaranty Associations.", 13 Jul 2023,

Chicago Simmons, Christian. "State Guaranty Associations." Last modified July 13, 2023.

Why Trust
Why You Can Trust Us

Content created by RetireGuide and sponsored by our partners.

Key Principles

RetireGuide’s mission is to provide seniors with resources that will help them reach important financial decisions that affect their retirement. Our goal is to arm our readers with knowledge that will lead to a healthy and financially sound retirement.

We’re dedicated to providing thoroughly researched annuity information that guides you toward making the best possible financial decisions for you and your family.

We partner with Senior Market Sales (SMS), a leader in the insurance industry with over 30 years of experience and a network of 66,000 independently licensed agents across the United States.

Our partnership with SMS (and Insuractive, the company’s consumer-facing branch) allows us to deliver expertly researched and reviewed content at no cost or obligation to all of our visitors. It also gives our visitors the opportunity to take the next step in their financial journey by requesting help from our partner through the phone numbers or forms provided on our website.

If a visitor chooses to inquire about an annuity or other financial product through SMS as a result of our research and accurate information, RetireGuide may receive compensation for connecting the visitor with SMS. The revenue we earn for helping visitors get the help they’re seeking makes RetireGuide stronger for our audiences.

The content and tools created by RetireGuide adhere to strict editorial guidelines to ensure quality and transparency.

Editorial Independence

While the experts from SMS are available to help you navigate various annuity options, RetireGuide retains complete editorial control over the information it publishes.

We operate independently from SMS, which allows the award-winning RetireGuide team to provide you with unbiased information.

Visitors can trust our inflexibility regarding our editorial autonomy. We do not allow our partnership to influence RetireGuide’s editorial content whatsoever.
Key Takeaways
  • State guaranty associations protect individual life insurance policy holders and annuity holders if their insurance provider becomes insolvent. All licensed insurance companies must be a member of the guaranty association in their state of operation.
  • Regulated by each state’s insurance commissioner, guaranty associations cover insurance and annuity contracts up to a limit. Each state determines its own limits.
  • Most guaranty associations cover up to at least $250,000, but the exact amount can vary by state.

What Are State Guaranty Associations?

State guaranty associations protect the customers of insurance providers in a similar way the Federal Deposit Insurance Corporation (FDIC) protects bank and credit union customers. If you purchase a policy or annuity from an insurance company that becomes insolvent, the state guaranty association steps in to protect customers’ funds up to a predetermined limit set by the state.

Guaranty associations are non-profit organizations regulated by each state rather than federal legislation. Each state’s guaranty association is typically overseen by the state insurance commissioner and an appointed board of directors.

All 50 states have state guaranty associations, as does the District of Columbia and Puerto Rico. Some states maintain separate guaranty associations for life and health insurance policies and for property and casualty policies. The U.S. Virgin Islands also has a guaranty association but only for property and casualty insurance.

Most people are familiar with FIDC insurance and the protection it provides to bank deposits, but state guaranty associations provide similar protection for insurance and annuities.

How State Guaranty Associations Work

Insurance companies must be members of the guaranty association in the states in which they are licensed. If an insurance provider turns insolvent, the state guaranty association will levy an assessment against all other insurance companies selling the same type of product in that state, then use the gathered funds to cover the insolvent firm’s financial obligations.

State guaranty associations may also voluntarily join the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA), which takes in funds from its members to cover policyholders if multi-state insurance providers become insolvent. The legislation that regulates state guaranty associations comes from NOLHGA’s model act which has been modified several times since it was first introduced in 1971.

State guaranty associations offer policy and annuity holders protection up to certain amounts depending on the type of policy or annuity.

In most states, the guaranty association will pay up to $300,000 in claims for life insurance policies and up to $250,000 in claims for annuity contracts. Each state sets its own limits and exceptions. For instance, California’s guaranty association will cover only 80% of an annuity, up to a limit of $250,000, while Connecticut will cover up to $500,00 for annuities.

State guaranty association intervention may not always be required even if an insurance company becomes insolvent. For instance, if an insolvent company sells its insurance and annuity contracts, the financial responsibility for those contracts goes to the purchasing provider instead. Basically, your annuity or policy is transferred to the new company.

Benefits of State Guaranty Associations for Annuity Holders

State guaranty associations provide a safety net for insurance companies and their customers. Just as the FDIC protects individuals from a bank collapse, state guaranty associations reassure individuals that their annuities, and life and health insurance policies won’t disappear if their insurance company goes broke. That reassurance provides a host of secondary advantages.

Benefits of State Guaranty Associations
Confidence in Retirement Planning
Insurance and annuities are foundational blocks in many retirement plans. When you know your insurance or annuity will be honored, you can build a solid financial plan to ensure a comfortable future in your retirement.
Preservation of Annuity Benefits and Payouts
By assuring the payout of annuities (up to the state-specific dollar and percentage amount), state guaranty associations make annuities a cost-effective option for retirees and those planning their retirement.
Peace of Mind
Most of all, the protection state guaranty associations offer gives you peace of mind, leaving you with mental bandwidth for other financial decisions.

How soon are you retiring?


What is your goal for purchasing an annuity?

Select all that apply

Learn About Top Annuity Products & Get a Free Quote

Find out how an annuity can offer you guaranteed monthly income throughout your retirement. Speak with one of our qualified financial professionals today to discover which of our industry-leading annuity products fits into your long-term financial strategy.

For fastest service, call now!

866-219-2282Call Now

Or fill out the form


State Guaranty Associations’ Coverage Limits and Scope

Most state guaranty associations offer coverage of at least $500,000 in health benefit plans; $300,000 in life insurance death benefits; and $250,000 in annuity benefits, according to NOLHGA.

The limits for deferred annuity payouts can vary by state, along with the limits for structured settlement annuities – which are often much higher.

Annuities Supported by Strong State Guaranty Associations

Like all investments, it’s important to consult with a financial planner before purchasing an annuity. Your advisor can help you decide which annuity is most appropriate for your retirement goals and plans. Also, insurance companies are not permitted to use their membership in state guaranty associations in their advertising or promotion, so your advisor can also help you figure out what questions to ask.

Considerations When Choosing an Annuity
Research the Association
Research the guaranty association in your state. Your state’s guaranty association falls under the jurisdiction of your state’s insurance commissioner.
Learn the Limits
Your state guaranty association will be able to explain the limits of their coverage for both insurance and annuity products.
Evaluate Your Insurer’s Financial Strength
State guaranty association coverage is only needed if your insurer becomes insolvent. Four companies A.M. Best; Fitch; Moody’s; and Standard & Poor’s rate insurance companies for financial stability and user response. Each company rates along different axes, so check several of them to be sure your chosen provider is financially secure before you buy an annuity.
3 Minute Quiz: Can You Retire Comfortably?
Take our free quiz & match with a financial advisor in 3 easy steps.
Tailored to your goals. Near you or online.

Frequently Asked Questions About State Guaranty Associations

Are all annuity contracts covered by state guaranty associations?
All licensed insurance providers must belong to state guaranty associations, so it will be covered if you buy your annuity from a licensed insurance company.
Can you transfer your annuity to a different provider with stronger state guaranty association backing?
Your annuity is covered by the state guaranty association of your current state of residence. You can only be a resident of one state at a time.
Can state guaranty associations help you if you purchase your annuity from an out-of-state insurer?
Yes, the guaranty association in the state you live in should provide coverage if your insurer can’t meet its obligation. In the rare instances that doesn’t happen, the state housing the insolvent company’s headquarters should provide coverage.

Editor Malori Malone contributed to this article.


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.

Last Modified: July 13, 2023

6 Cited Research Articles

  1. Retrieved from
  2. Insurance Information Institute. (2023). How to assess the financial strength of an insurance company. Retrieved from
  3. National Organization of Life & Health Insurance Guaranty Associations. (2022, November 28). Advertising Prohibition - State Comparison Report. Retrieved from
  4. National Organization of Life & Health Insurance Guaranty Associations. (2022). The Nation’s Safety Net. Retrieved from
  5. American Council of Life Insurers. (2010, June) Insurance Guaranty Associations: Frequently Asked Questions. Retrieved from
  6. National Organization of Life & Health Insurance Guaranty Associations. (n.d.). Frequently Asked Questions. Retrieved from