State annuity protection

Iowa Annuity Guaranty Protection: $250,000 Annuity Limit / $350,000 Aggregate

Iowa 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 and statutory exclusions.

Iowa 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
$350,000
Iowa generally applies a $350,000 aggregate with respect to one life across the ordinary per-life and specified special categories, while the ordinary annuity limit remains $250,000. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate.
Who provides protection
Iowa Life & Health Insurance Guaranty Association
The Iowa Life and Health Insurance Guaranty Association provides statutory protection for covered obligations of impaired or insolvent member insurers. Iowa also provides limited nonresident coverage based on insurer domicile and interstate coordination rules.
Insurer requirement
Member insurer
The issuing insurer must qualify as a member insurer under Iowa law, and the policy or contract must otherwise be covered under Chapter 508C.

How the $250,000 limit works

Iowa generally provides up to $250,000 in present-value annuity benefits with respect to one life, regardless of the number of policies or contracts.

Technical note: Iowa’s statute states the ordinary annuity limit with respect to one life, while the Association’s FAQ illustrates coverage as $250,000 per owner per member company. Unusual owner/annuitant or joint-ownership arrangements may require case-specific review.

Multiple annuity policies or contracts with respect to the same life at the same impaired or insolvent member insurer share Iowa’s $250,000 ordinary annuity limit.

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

Iowa generally applies a $350,000 aggregate with respect to one life across the ordinary per-life and specified special categories, while the ordinary annuity limit remains $250,000. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate.

  • An eligible individual participating in a retirement benefit plan established under IRC sections 401, 403(b), or 457 may receive up to $250,000 in present-value annuity benefits. Iowa also provides a $250,000 aggregate for certain qualifying unallocated annuity contract accounts outside those plans. These amounts are subject to the applicable $350,000 per-life aggregate.
  • A qualifying plan sponsor whose plan owns one or more covered unallocated annuity contracts outside the $250,000 category may receive up to $5 million in benefits in the aggregate, regardless of the number of contracts held.
  • A qualifying structured-settlement payee, or the beneficiary or beneficiaries of a deceased payee, may receive up to $250,000 in present-value annuity benefits. This category is also included in Iowa’s applicable $350,000 aggregate with respect to one life.

A $300,000 annuity example

Assume an Iowa resident owns an eligible fixed annuity with a covered present value of $300,000 at one impaired or insolvent 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 guaranty 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 annuity contract satisfy Iowa’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 Iowa’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, Iowa 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 Iowa’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 policy or contract holder 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 participants in qualifying 401, 403(b), or 457 plans and certain qualifying unallocated annuity contract accounts may receive up to $250,000, while certain other qualifying plan sponsors may receive up to $5 million in aggregate benefits.

Who may qualify?

  • Residency is determined on the date of entry of a court order determining the member insurer to be impaired or insolvent.
  • Eligibility depends on the claimant’s role under the covered policy or contract. Ordinary coverage generally includes qualifying owners, certificate holders, enrollees, insureds, and annuitants, while structured settlements and unallocated annuities have separate payee, beneficiary, contract-owner, and plan-sponsor rules.
  • A nonresident may qualify in limited circumstances when the issuing insurer is Iowa-domiciled, the person’s state of residence has a similar guaranty association, and the person is not eligible for coverage there because the insurer was not licensed as required by that state’s guaranty law.
  • A U.S. citizen residing in a foreign country or in a U.S. territory without a similar guaranty association may be treated as a resident of the issuing member insurer’s state of domicile. Structured-settlement payees and beneficiaries follow separate residency and coordination rules under § 508C.3.
  • The issuing insurer must qualify as a member insurer under Iowa law, and the policy or contract must otherwise be covered under Chapter 508C.

What is not covered?

  • Portions of a policy or contract that are not guaranteed by the member insurer, or where the policy or contract holder bears the investment risk, are generally excluded from guaranty protection.
  • Interest, crediting rates, or similar factors above Iowa’s statutory limits based on Moody’s Corporate Bond Yield Average may be excluded from guaranty protection.
  • Structured-settlement payment rights acquired through a structured-settlement factoring transaction are excluded from Iowa guaranty protection.
  • Unallocated annuity contracts issued to or in connection with PBGC-protected employee benefit plans are excluded. Iowa also excludes portions of unallocated annuity contracts not issued to or in connection with a specific employee, union, or association of natural persons, subject to the Act’s covered unallocated-annuity categories.
  • Claims based on marketing materials, unauthorized side letters or riders, misrepresentations, extra-contractual claims, penalties, and consequential or incidental damages are generally excluded from guaranty protection.
  • Reinsurance is excluded unless assumption certificates have been issued.
  • Charitable gift annuities, government-lottery annuities, funding agreements under § 508.31A, and specified self-funded or uninsured employer benefit arrangements are excluded.
  • Book-value accounting guarantees, dividends, experience-rating credits, and certain administrative fees or allowances are excluded.
  • Policies or contracts issued in Iowa while the member insurer lacked authority to issue them are excluded.
  • Benefits provided under Medicare Parts C or D, Medicaid, or regulations issued under those programs are excluded.

What happens when an insurer becomes impaired or insolvent?

  1. The insurer becomes impaired or insolvent

    The relevant court order determining the member insurer to be impaired or insolvent establishes the residency date. The Association may take specified discretionary actions for an impaired insurer and has separate powers with respect to an insolvent insurer.

  2. Claimant, insurer, and contract eligibility are determined

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

  3. Covered contractual benefits and applicable limits are determined

    For ordinary annuities, the Association applies the $250,000 present-value limit with respect to one life and then applies the $350,000 aggregate across the statutory categories to which that aggregate applies. Qualifying health-benefit-plan benefits use the separate $500,000 aggregate.

  4. Amounts above guaranty protection may remain in 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 Association is funded primarily through 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 Iowa’s statutory health, life-insurance, annuity, and unallocated-annuity accounts and among member insurers based generally on applicable covered Iowa premiums under § 508C.9.
Annual assessment cap
Defined by state law
Annual assessment cap — 2%. For each statutory account, total annual assessments generally cannot exceed 2% of the member insurer’s average annual Iowa premiums on covered business during the three calendar years preceding the year in which the affected insurer became impaired or insolvent.
Premium-tax treatment
State-specific rule
Tax treatment — 20% per year for five years. A member insurer may offset 20% of a qualifying assessment in each of the five calendar years following the year of payment. Under the 2026 amendment to § 508C.19, the offset may apply against premium-tax liability or qualifying health care-related tax liability, subject to the statute.
Consumer-limit reminder
Funding mechanics do not change consumer coverage limits; eligible annuity benefits remain subject to Iowa’s statutory exclusions and applicable dollar limits.

What to know before buying

  • Iowa’s ordinary $250,000 annuity limit and $350,000 aggregate are stated with respect to one life, so multiple covered benefits involving the same life at one member insurer can interact.
  • Iowa prohibits any person, including a member insurer, agent, or affiliate, from using the existence of the Guaranty Association in written or oral statements for sales, solicitation, or inducement to purchase covered insurance. Member insurers must also deliver the Commissioner-approved guaranty-association summary and disclosure with covered policies or contracts.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Iowa guaranty protection may apply to eligible contractual annuity benefits and, in limited circumstances, to qualifying nonresidents under Iowa’s interstate coordination rules.
    FDIC: FDIC protection covers eligible deposits under the federal rules applying at bank failure.
  • What system stands behind it
    State protection: The Iowa Life and Health Insurance Guaranty Association is a nonprofit legal entity created by statute and funded through assessments of member insurers.
    FDIC: Eligible deposits receive federal deposit insurance backed by the full faith and credit of the United States government.
  • Coverage-limit basis
    State protection: Iowa generally provides up to $250,000 in present-value annuity benefits with respect to one life, subject to the applicable $350,000 aggregate.
    FDIC: Federal limits count deposits by depositor, insured bank, and ownership category.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Iowa guaranty association protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: No annuity receives FDIC insurance because it is not a deposit account.

Sources and last verified

Last verified: October 5, 2026