State annuity protection

Delaware Annuity Guaranty Protection: $250,000 Limit Explained

Delaware generally provides up to $250,000 in protection for the present value of covered annuity benefits, subject to eligibility requirements and statutory exclusions.

Delaware annuity protection at a glance

Annuity benefit limit
$250,000
Qualifying annuity income, surrender value, and withdrawal value discounted to the Delaware failure date
Overall benefit cap
$300,000
The act places ordinary covered benefits under a broader per-life aggregate after the individual category limits are applied.
Who provides protection
Delaware Life and Health Insurance Guaranty Association
DILHIGA handles eligible Delaware claims and coordinates covered obligations with the insurance receiver.
Insurer requirement
Member insurer
The issuer must be within Delaware’s member-insurer definition.

How the $250,000 limit works

Delaware limits the present value of covered annuity benefits to $250,000 under the act’s aggregation and exclusion rules.

Ownership note: Delaware law measures the limit with respect to one life, while DILHIGA’s ordinary examples use a contract-owner label. Unusual owner-and-annuitant arrangements may require confirmation.

Covered contracts measured on one life at a single failed company share Delaware’s $250,000 annuity amount.

Delaware handles unrelated insolvent member insurers in separate proceedings rather than one shared carrier limit.

The act places ordinary covered benefits under a broader per-life aggregate after the individual category limits are applied.

  • Delaware caps each eligible governmental-plan participant’s interest in a covered unallocated annuity at $250,000.
  • Certain other qualifying unallocated annuity arrangements are limited to $1 million per contract owner or plan sponsor.
  • Delaware separately caps an eligible structured-settlement payee’s protected present value at $250,000.

A $300,000 annuity example

Assume two $150,000 contracts total $300,000 at one member insurer and are both measured on the same life.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

The statutory reading caps the combined eligible value at $250,000, leaving $50,000 outside the guaranty amount.

The illustration assumes the claimant and contract meet Delaware’s statutory eligibility requirements.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed-annuity benefits can qualify within the statutory present-value line.

  • Fixed indexed annuity (FIA)

    Generally covered

    Delaware removes nonguaranteed or forfeitable index results and separately calculates accrued value for an index strategy that credits less than once each year.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGA contracts on one life at one insurer share the annuity amount.

  • Variable annuity

    Guaranteed portions may be covered

    Only insurer guarantees within a variable annuity are considered.

  • Registered index-linked annuity (RILA)

    Contract-specific

    RILA protection depends on the contractual guarantee, not market-linked account value as a whole.

  • Unallocated annuity contract

    Limited situations

    In Delaware’s special unallocated categories, an eligible government-plan participant has a $250,000 maximum, while another qualifying contract has a $1 million owner-or-sponsor cap.

Who may qualify?

  • Delaware applies residence at the act’s specified impairment or insolvency event.
  • Ownership ordinarily directs individual-contract eligibility, but the limit itself is stated with respect to one life.
  • The fallback requires a Delaware-domiciled insurer, a similar association in the person’s home state, and ineligibility there because the insurer was not appropriately licensed under that state’s guaranty law.
  • The fallback coordinates, rather than duplicates, protection in another state.
  • The issuer must be within Delaware’s member-insurer definition.

What is not covered?

  • Nonguaranteed benefits remain outside the obligation.
  • Interest above the statutory reference rate is excluded.
  • Unposted or forfeitable index value can fall outside Delaware protection. For a longer-than-yearly credit interval, the statute measures accrual by moving the contract credit date to the trigger.
  • Contracts issued by excluded entities or outside listed plan categories do not qualify.

What happens after an insurer fails?

  1. 1

    Establish the order date

    The controlling event fixes residence and the statutory version.

  2. 2

    Determine residency and eligibility

    DILHIGA checks residence, member-insurer status, claimant role, and contract eligibility.

  3. 3

    Calculate eligible present value

    Exclusions are applied before the $250,000 ceiling and broader aggregate.

  4. 4

    Handle amounts above the limit

    Any amount beyond the association obligation may remain a claim in the failed insurer’s estate.

How the guaranty system is financed

Delaware member insurers fund association obligations through assessments authorized by the act.

Assessment allocation
Member insurers
Calls are allocated using the statutory accounts and Delaware premium base.
Annual assessment cap
Defined by state law
Delaware places a 2% yearly aggregate ceiling on every account or subaccount. Its oversight-only Class B call has a distinct 0.1% maximum tied to the prior year’s written premium.
Premium-tax treatment
State-specific rule
Delaware permits an eligible Class C assessment to be recovered through five post-payment premium-tax credits of 20% each.
Delaware association calls
Delaware also limits the separate oversight-only Class B assessment to 0.1% of the applicable prior-year written premium.

What to know before buying

  • Use Delaware’s $250,000 annuity amount for planning and confirm that the claimant, insurer, and contract satisfy the act.
  • Delaware bars use of association protection to sell or solicit insurance and provides for consumer notice.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Delaware protection applies to a covered annuity obligation after statutory exclusions.
    FDIC: FDIC protection applies to eligible funds deposited in an insured bank.
  • What system stands behind it
    State protection: DILHIGA and its member insurers form Delaware’s state guaranty system.
    FDIC: The federal system is supported by banks carrying FDIC insurance.
  • Coverage-limit basis
    State protection: Delaware’s annuity ceiling is $250,000, applied through the Act’s aggregation framework.
    FDIC: The depositor’s ownership category at each bank supplies the federal counting unit.
  • Whether it applies to annuities
    State protection: A qualifying Delaware annuity may receive DILHIGA protection for covered contractual benefits.
    FDIC: An annuity contract is not a bank deposit and does not receive FDIC insurance.

Sources and last verified

Last verified: August 20, 2026