State annuity protection

Illinois Annuity Guaranty Protection: $250,000 Limit Explained

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

Illinois annuity protection at a glance

Annuity benefit limit
$250,000
Present value of covered annuity benefits, not merely the contract’s withdrawal balance
Overall benefit cap
$300,000
Most life and annuity benefits share a $300,000 per-individual roof; covered health benefit plans can reach $500,000.
Who provides protection
Illinois Life and Health Insurance Guaranty Association
The Illinois Life and Health Insurance Guaranty Association works with the Office of Special Deputy Receiver on covered failures.
Insurer requirement
Member insurer
The issuer must have been an Illinois member insurer.

How the $250,000 limit works

The statute’s present-value language controls even though consumer material shortens the category to withdrawal and cash values.

Multiple annuities with the same failed insurer do not create separate $250,000 limits. The limit applies regardless of the number of policies or contracts.

A second carrier’s obligations are handled in that company’s own receivership.

Most life and annuity benefits share a $300,000 per-individual roof; covered health benefit plans can reach $500,000.

  • Participants in certain covered governmental retirement plans may qualify for up to $250,000 each under an unallocated annuity contract.
  • A qualifying plan sponsor or contract owner may receive up to $5 million for covered unallocated annuity benefits, subject to statutory exclusions.

A $300,000 annuity example

Assume $300,000 of eligible annuity present value and no other benefit at the failed carrier.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

$250,000 is within the category limit and $50,000 remains an estate claim.

The example assumes residence was fixed in Illinois at the statutory determination.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed-annuity eligible value can qualify to $250,000.

  • Fixed indexed annuity (FIA)

    Generally covered

    An FIA’s covered value is contract-specific. Illinois pulls forward a crediting calculation scheduled more than a year apart to the impairment or insolvency date.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGAs are generally treated as fixed deferred annuities and may qualify for up to $250,000 in covered present-value benefits.

  • Variable annuity

    Guaranteed portions may be covered

    Only the insurer-guaranteed part of a variable contract is relevant.

  • Registered index-linked annuity (RILA)

    Contract-specific

    Only obligations guaranteed by the insurer may qualify; portions where the contract owner bears the market or index risk are generally excluded.

  • Unallocated annuity contract

    Limited situations

    Covered in limited circumstances: certain governmental-plan participants may qualify for up to $250,000 each, while a qualifying plan sponsor or contract owner may qualify for up to $5 million.

Who may qualify?

  • Residency is generally determined on the date a court enters an order finding the member insurer impaired or insolvent.
  • The owner usually controls; payees and participants follow specialized provisions.
  • A nonresident route requires an Illinois-domiciled issuer and no home-state protection.
  • The act assigns one association to the obligation.
  • The issuer must have been an Illinois member insurer.

What is not covered?

  • Nonguaranteed value is excluded.
  • Excess interest is removed.
  • Unvested index gains are generally excluded; Illinois nevertheless accelerates the calculation when contractual credits occur more than a year apart.
  • Nonmember entities and unlisted arrangements are outside the act.

What happens after an insurer fails?

  1. 1

    Court control begins

    Conservation or rehabilitation can precede any liquidation.

  2. 2

    Residence is fixed

    The impairment or insolvency determination supplies Illinois’s eligibility date.

  3. 3

    ILHIGA calculates

    Covered value is tested against the annuity and aggregate limits.

  4. 4

    Receiver administers

    Amounts above the association limit may remain claims against the failed insurer’s receivership estate, with additional recovery depending on available estate assets.

How the guaranty system is financed

Illinois member insurers are assessed for covered obligations.

Assessment allocation
Member insurers
Calls are allocated through statutory accounts using Illinois premiums.
Annual assessment cap
Defined by state law
Illinois caps annual assessments at 2% for each applicable account or subaccount, based on a member insurer’s average annual Illinois premiums over the preceding three years.
Premium-tax treatment
No consumer rule stated
Illinois consumer guidance does not describe the premium-tax result of an ILHIGA call.
Illinois member assessments
Assessment authority supports covered claims without changing the controlling statutory measure.

What to know before buying

  • Use the statutory present-value line and count other covered products at the same insurer toward the aggregate.
  • Illinois forbids using the association’s existence for sales, solicitation, or inducement.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Illinois guaranty protection covers eligible annuity promises established in the insurance receivership.
    FDIC: FDIC insurance covers eligible deposit obligations after a bank failure.
  • What system stands behind it
    State protection: ILHIGA’s member insurers provide the state association system behind covered claims.
    FDIC: Bank deposits insured by the FDIC carry the full faith and credit of the U.S. government; ILHIGA protection does not.
  • Coverage-limit basis
    State protection: Illinois uses $250,000 per individual with a $300,000 ordinary cross-product aggregate.
    FDIC: Federal deposit limits use depositor, bank, and ownership capacity.
  • Whether it applies to annuities
    State protection: A qualifying Illinois annuity may receive ILHIGA protection for covered contractual value.
    FDIC: Annuity contracts are not deposits and are never insured by the FDIC.

Sources and last verified

Last verified: August 24, 2026