State annuity protection

Arkansas Annuity Guaranty Protection: $300,000 Limit Explained

Arkansas generally provides up to $300,000 in protection for the present value of covered annuity benefits with respect to one life, including eligible net cash surrender and withdrawal values, subject to eligibility requirements and statutory exclusions.

Arkansas annuity protection at a glance

Annuity benefit limit
$300,000
Covered annuity benefits measured at present value, including eligible net cash surrender and net cash withdrawal values
Overall benefit cap
$300,000
Most covered benefits are subject to a $300,000 aggregate with respect to one life. When qualifying health-benefit-plan benefits are involved, the applicable aggregate may increase to $500,000 with respect to one individual.
Who provides protection
Arkansas Life and Health Insurance Guaranty Association
The Arkansas Life and Health Insurance Guaranty Association may act for an impaired member insurer and has specified duties when a member insurer becomes insolvent, coordinating with the receiver as appropriate.
Insurer requirement
Member insurer
The issuing insurer must qualify as a member insurer under Arkansas law, and the policy or contract must otherwise be covered under Chapter 96.

How the $300,000 limit works

For an ordinary covered annuity, Arkansas applies a $300,000 present-value limit with respect to one life. Amounts above guaranty protection may remain claims against the insurer’s receivership estate.

Special workers’ compensation annuity rule: An annuity executed under Ark. Code §11-9-210 is limited to the lesser of the insurer’s contractual obligation or $100,000 in present-value annuity benefits; covered payments are sent through the Workers’ Compensation Commission.

The $300,000 ordinary annuity limit applies with respect to one life, regardless of the number of annuity policies or contracts with the same impaired or insolvent member insurer.

Coverage limits are generally applied separately to each impaired or insolvent member insurer, subject to Arkansas’s eligibility and interstate coordination rules.

Most covered benefits are subject to a $300,000 aggregate with respect to one life. When qualifying health-benefit-plan benefits are involved, the applicable aggregate may increase to $500,000 with respect to one individual.

  • An eligible participant in a governmental retirement plan established under IRC sections 401(k), 403(b), or 457 and covered by an unallocated annuity contract may receive up to $300,000 in present-value annuity benefits, subject to the applicable statutory aggregate.
  • Certain other qualifying unallocated-annuity contract owners or plan sponsors may receive up to $1 million in benefits in the aggregate, regardless of the number of qualifying contracts, subject to Arkansas’s plan-sponsor and ownership rules.
  • A qualifying structured-settlement payee, or the beneficiary or beneficiaries of a deceased payee, may receive up to $300,000 in present-value annuity benefits, subject to Arkansas’s eligibility and aggregate rules.

A $350,000 annuity example

Assume an eligible Arkansas fixed annuity has a covered present value of $350,000 at one impaired or insolvent member insurer and there are no other covered benefits affecting the aggregate.

Annuity value

$350,000

Potential protection

$300,000

Possible receivership claim

$50,000

In this example, up to $300,000 may qualify for guaranty association protection, while the remaining $50,000 may remain a claim against the insurer’s receivership estate.

This example assumes an eligible fixed annuity, one impaired or insolvent Arkansas member insurer, and no other covered benefits affecting the aggregate.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Arkansas’s $300,000 present-value annuity limit, subject to residency, member-insurer requirements, statutory exclusions, and other eligibility rules.

  • Fixed indexed annuity (FIA)

    Generally covered

    FIAs are generally covered to the extent of qualifying insurer-guaranteed benefits. Certain excess, uncredited, or forfeitable index-linked amounts may be excluded; however, when value is credited less frequently than annually, Arkansas determines the value as though the earlier impairment or insolvency date were the contractual crediting date.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGAs are generally treated as fixed deferred annuities and are subject to Arkansas’s $300,000 annuity limit and statutory interest-rate restrictions.

  • Variable annuity

    Guaranteed portions may be covered

    For an Arkansas variable annuity, only qualifying benefits guaranteed by the insurer may receive protection; investment gains or losses borne by the contract owner through a separate account are generally excluded.

  • Registered index-linked annuity (RILA)

    Contract-specific

    For an Arkansas RILA, qualifying obligations guaranteed by the insurer may be covered, while portions where the contract owner bears market or index risk are generally excluded.

  • Unallocated annuity contract

    Limited situations

    Unallocated annuity contracts are covered only in specified circumstances. Eligible governmental-plan participants may receive up to $300,000 each, while certain other qualifying contract owners or plan sponsors may receive up to $1 million in aggregate benefits.

Who may qualify?

  • Residency is generally determined on the date of entry of the court order determining the member insurer to be impaired or insolvent.
  • For ordinary annuities, eligibility generally follows the qualifying owner or certificate holder. Structured settlements and unallocated annuity arrangements use separate payee, beneficiary, contract-owner, participant, and plan-sponsor rules.
  • A nonresident may qualify in limited circumstances when the issuing insurer is Arkansas-domiciled, the state of residence has a similar guaranty association, and the person is not eligible for protection there because the insurer lacked the required license or authority under that state’s law.
  • Arkansas’s interstate coordination rules are designed to provide protection through only one state guaranty association and prevent duplicate guaranty coverage for the same obligation.

What is not covered?

  • Portions of a policy or contract that are not guaranteed by the member insurer, or where the policy or contract owner bears the investment or market risk, are generally excluded from guaranty protection.
  • Self-funded or uninsured employer, association, or similar benefit arrangements are generally excluded, including specified MEWA, minimum-premium, stop-loss, and administrative-services-only arrangements.
  • Unallocated annuity contracts are covered only in specified circumstances. PBGC-protected plans and unallocated contracts outside qualifying benefit-plan, government-lottery, or other statutory categories are excluded.
  • Claims based on marketing materials, unauthorized side letters or riders, misrepresentations, bad faith, punitive or exemplary damages, attorneys’ fees and costs, and other extra-contractual obligations are generally excluded.
  • Claims for consequential or incidental damages and statutory penalties are generally excluded from guaranty protection.
  • Interest or crediting above Arkansas’s statutory limits and certain uncredited or forfeitable index-linked amounts may be excluded. If index-linked value is credited less frequently than annually, Arkansas calculates the value as though the earlier impairment or insolvency date were the contractual crediting date.

What happens when an insurer becomes impaired or insolvent?

  1. 1

    Determine the insurer’s impairment or insolvency status

    A court order placing a member insurer into rehabilitation or conservation establishes impairment, while a liquidation order with a finding of insolvency establishes insolvency. The Association’s powers and duties depend on that status.

  2. 2

    Determine claimant and contract eligibility

    The Association determines whether the claimant, issuing insurer, and contract satisfy Arkansas’s residency, ownership, member-insurer, and interstate coordination requirements.

  3. 3

    Determine covered benefits and apply the limits

    The Association determines the covered contractual obligation after applying statutory exclusions and then applies the applicable annuity, special-category, and aggregate limits.

  4. 4

    Coordinate amounts above guaranty protection with the receivership

    Covered obligations may be continued, assumed, reissued, reinsured, or paid as authorized by law, while amounts above guaranty protection may remain claims against the insurer’s receivership estate.

How the guaranty system is financed

The Association is funded primarily through statutory assessments of member insurers when funds are needed to carry out its obligations for impaired or insolvent member insurers.

Assessment allocation
Member insurers
Class B assessments are allocated among Arkansas’s statutory accounts and subaccounts and among member insurers based generally on covered Arkansas premiums under the formulas in §23-96-115.
Annual assessment cap
2%
Annual assessment cap — 2%. For each applicable life-and-annuity subaccount and the health account, total annual assessments generally cannot exceed 2% of the member insurer’s average annual Arkansas premiums on covered business during the three calendar years preceding the year in which the affected insurer became impaired or insolvent.
Premium-tax treatment
20% per year for five years
Premium-tax treatment — 20% per year for five years. A member insurer may generally offset 20% of a qualifying assessment against Arkansas premium-tax liability in each of the five calendar years following the year in which the assessment was paid.
Association funding does not change consumer limits
How the Association is funded does not change consumer coverage limits; eligible benefits remain subject to Arkansas’s statutory exclusions and applicable dollar limits.

What to know before buying

  • Guaranty-association protection is limited statutory protection and is separate from the issuing insurer’s financial strength, contract terms, costs, and guarantees.
  • Arkansas generally prohibits using the existence of the Guaranty Association for sales, solicitation, or inducement to purchase covered insurance or annuity products, except as permitted by Insurance Commissioner rules. The required guaranty-association summary and disclaimer must also be delivered as prescribed by law and Rule 49.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Arkansas guaranty protection may apply to covered contractual obligations of an impaired or insolvent member life or annuity insurer.
    FDIC: FDIC insurance applies to eligible deposits at an insured bank.
  • What system stands behind it
    State protection: The Arkansas Life and Health Insurance Guaranty Association is a statutory nonprofit association funded primarily through assessments of member insurers.
    FDIC: Insured banks fund the federal deposit-insurance system through assessments.
  • Coverage-limit basis
    State protection: Arkansas generally provides up to $300,000 in present-value annuity benefits with respect to one life, regardless of the number of policies or contracts, subject to the applicable aggregate and statutory exclusions.
    FDIC: Deposit limits are measured by depositor, insured bank, and ownership category.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Arkansas guaranty association protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: An annuity is an insurance contract rather than an FDIC-insured deposit.

Sources and last verified

Last verified: September 25, 2026