State annuity protection

Indiana Annuity Guaranty Protection: $250,000 Annuity Limit Explained

Indiana generally provides up to $250,000 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, statutory exclusions, and a separate $300,000 aggregate.

Indiana annuity protection at a glance

Annuity benefit limit
$250,000
Present value of covered annuity benefits, including eligible net cash surrender and net cash withdrawal values
Overall benefit cap
$300,000
The ordinary per-life, governmental-plan-participant, and structured-settlement categories are generally subject to a $300,000 aggregate with respect to one person. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate.
Who provides protection
Indiana Life and Health Insurance Guaranty Association
The Indiana Life and Health Insurance Guaranty Association provides statutory protection for covered obligations of impaired or insolvent member insurers and coordinates with the receiver when appropriate.
Insurer requirement
Member insurer
The issuing insurer must qualify as a member insurer under Indiana law, and the policy or contract must otherwise be covered under IC 27-8-8.

How the $250,000 limit works

Indiana generally provides up to $250,000 in present-value annuity benefits with respect to one life at one impaired or insolvent member insurer.

Coverage-unit note: ILHIGA’s FAQ illustrates ordinary annuity coverage as $250,000 per annuitant, while IC 27-8-8-2.3 states the limit with respect to one life. The statutory one-life rule is the primary rule, and the $300,000 aggregate separately applies across the ordinary per-life, governmental-plan-participant, and structured-settlement categories.

The ordinary $250,000 annuity limit applies with respect to one life regardless of the number of policies or contracts at the same impaired or insolvent member insurer.

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

The ordinary per-life, governmental-plan-participant, and structured-settlement categories are generally subject to a $300,000 aggregate with respect to one person. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate.

  • An eligible participant in a governmental benefit plan established under IRC sections 401, 403(b), or 457 and covered by an unallocated annuity contract may receive up to $250,000 in present-value annuity benefits. This amount is also included in the applicable $300,000 aggregate with respect to that person.
  • Certain other qualifying unallocated annuity contracts issued in connection with a benefit plan may receive up to $5 million in aggregate benefits per plan sponsor, regardless of the number of contracts. A qualifying government-lottery unallocated annuity has a separate $5 million aggregate limit per contract owner.
  • A qualifying structured-settlement payee, or the beneficiary of a deceased payee, may receive up to $250,000 in present-value annuity benefits. This category is also included in Indiana’s applicable $300,000 aggregate with respect to one person.

A $300,000 annuity example

Assume an eligible annuity has a covered present value of $300,000 with respect to one life at one impaired or insolvent Indiana member insurer.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

In this example, up to $250,000 may qualify for Association protection, while the remaining $50,000 may remain a claim against the insurer’s receivership estate.

This example assumes that the claimant, issuing insurer, and contract satisfy Indiana’s eligibility requirements and that the stated value represents covered contractual benefits.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Indiana’s $250,000 present-value annuity limit with respect to one life, subject to eligibility requirements and statutory exclusions.

  • 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, Indiana determines the value as though the applicable coverage 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 Indiana’s $250,000 annuity limit and statutory interest-rate restrictions.

  • Variable annuity

    Guaranteed portions may be covered

    Only qualifying insurer-guaranteed benefits 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 a RILA, qualifying insurer-guaranteed obligations 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 $250,000 each; certain other benefit-plan contracts may receive up to $5 million per plan sponsor; and qualifying government-lottery contracts may receive up to $5 million per contract owner.

Who may qualify?

  • Residency is determined on the applicable coverage date. Indiana defines the coverage date as the earlier of the date the member insurer becomes insolvent or the date the Association determines that it will provide coverage for an impaired insurer under IC 27-8-8-5(a).
  • The ordinary $250,000 statutory limit is stated with respect to one life. Structured settlements and unallocated annuity arrangements use separate payee, beneficiary, participant, contract-owner, and plan-sponsor rules.
  • A nonresident may qualify in limited circumstances when the issuing insurer is Indiana-domiciled, the person’s state of residence has a similar guaranty association, and the person is not eligible for coverage there solely because the insurer lacked the required license under that state’s guaranty law.
  • Indiana’s interstate coordination rules are designed to provide protection through only one state guaranty association and prevent duplicate guaranty coverage for the same obligation.
  • The issuing insurer must qualify as a member insurer under Indiana law, and the policy or contract must otherwise be covered under IC 27-8-8.

What is not covered?

  • Portions of a policy or contract that are not guaranteed by the member insurer, or where the payee, certificate holder, policy owner, or contract owner bears the investment risk, are generally excluded.
  • Interest, crediting rates, or similar factors above Indiana’s statutory limits based on Moody’s Corporate Bond Yield Average may be excluded.
  • Certain uncredited or forfeitable index-linked amounts may be excluded. If index-linked value is credited less frequently than annually, Indiana calculates the value as though the applicable coverage date were the contractual crediting date and treats the result as credited and nonforfeitable.
  • Unallocated annuity contracts issued to or in connection with PBGC-protected benefit plans are excluded. Unallocated contracts not connected to a qualifying benefit plan or government lottery are also excluded.
  • Claims based on marketing materials, unauthorized side letters or riders, misrepresentations, extra-contractual claims, penalties, and consequential, incidental, punitive, or exemplary damages are generally excluded.
  • Reinsurance obligations are generally excluded unless an assumption certificate has been issued.
  • Self-funded or uninsured employer arrangements, minimum-premium plans, stop-loss or excess-loss coverage, and administrative-services-only contracts are generally excluded.
  • Dividends, experience-rating credits, voting rights, administrative fees, funding agreements, certain exempt annuities and book-value guarantees, and Medicare Part C, Part D, or Medicaid benefits are generally excluded.

What happens when an insurer becomes impaired or insolvent?

  1. Determine the applicable coverage date and statutory rules

    Indiana determines the applicable coverage date and which version of the Guaranty Association Law governs the insurer. The coverage date can arise when the insurer becomes insolvent or earlier if the Association elects to provide coverage for an impaired insurer.

  2. Determine claimant, insurer, and contract eligibility

    The Association determines whether the claimant, issuing insurer, and contract satisfy Indiana’s residency, member-insurer, ownership, and coverage requirements. The ordinary annuity limit is then applied with respect to one life.

  3. Determine covered benefits and apply the limits

    Indiana applies the $250,000 ordinary annuity limit with respect to one life and then applies the $300,000 aggregate across the statutory ordinary per-life, governmental-plan-participant, and structured-settlement categories.

  4. Coordinate amounts above guaranty protection with the receivership

    Amounts above the Association’s protection may remain claims against the impaired or insolvent insurer’s receivership estate, with any additional recovery depending on available estate assets and the receivership process.

How the guaranty system is financed

The Indiana Life and Health Insurance Guaranty Association is funded primarily through assessments of member insurers when funds are needed to carry out its statutory obligations.

Assessment allocation
Member insurers
Class B assessments are allocated among Indiana’s statutory accounts and subaccounts and among member insurers according to covered Indiana premiums and the assessment-base-year rules in IC 27-8-8-6.
Annual assessment cap
Defined by state law
Annual assessment cap — 2%. For each applicable subaccount of the life-insurance-and-annuity account and for the health account, annual assessments generally cannot exceed 2% of the member insurer’s covered Indiana premiums for the applicable assessment base year, generally the most recent calendar year with required premium information available before the affected insurer’s coverage date.
Premium-tax treatment
State-specific rule
Premium-tax treatment — up to 20% per year beginning in the calendar year after payment. A member insurer may credit up to 20% of a qualifying assessment each year against Indiana premium tax, adjusted gross income tax, or a combination until the assessment has been fully offset by tax credits or Association refunds.
Indiana assessment funding
Historical limit note — the 2013 amendments to the current benefit-limit provisions do not apply to a member insurer placed under an order of rehabilitation or liquidation before January 1, 2013. Earlier proceedings may therefore remain subject to the former $100,000 annuity limit.

What to know before buying

  • Indiana’s $250,000 figure is a statutory maximum; actual protection depends on claimant eligibility, the issuing member insurer, contract terms, the applicable coverage date, and statutory exclusions.
  • Indiana prohibits using the existence of the Guaranty Association for sales, solicitation, or inducement to purchase covered insurance. Member insurers must also deliver the Commissioner-approved guaranty-association summary document with covered policies or contracts as required by law.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Indiana guaranty protection may apply to eligible contractual annuity obligations of impaired or insolvent member insurers, subject to statutory limits and exclusions.
    FDIC: FDIC protection covers eligible deposits under the federal rules applying at bank failure.
  • What system stands behind it
    State protection: The Indiana Life and Health Insurance Guaranty Association is a statutory association funded primarily through assessments of member insurers and regulated by the Indiana Insurance Commissioner.
    FDIC: Federally insured banks support the deposit fund administered by the FDIC.
  • Coverage-limit basis
    State protection: Indiana generally provides up to $250,000 in present-value annuity benefits with respect to one life, subject to the applicable $300,000 aggregate.
    FDIC: Federal aggregation turns on depositor, bank, and account-ownership category.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Indiana guaranty association protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: An annuity has no FDIC insurance because it is an insurance contract rather than a deposit.

Sources and last verified

Last verified: October 5, 2026