State annuity protection

Iowa Annuity Guaranty Protection Explained

Iowa generally provides up to $250,000 in protection for the present value of covered annuity benefits, 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 qualifying net surrender and withdrawal value
Overall benefit cap
$350,000
Iowa’s $350,000 per-life aggregate combines the covered categories to which it applies, while the annuity category itself remains capped at $250,000.
Who provides protection
Iowa Life & Health Insurance Guaranty Association
Chapter 508C sends eligible claims to Iowa’s association and uses insurer domicile to catch a few people with no Iowa address.
Insurer requirement
Member insurer
An Iowa resident’s contract must have been issued by a member insurer covered by the chapter.

How the $250,000 limit works

Iowa applies a $250,000 present-value ceiling to covered annuity benefits measured on one life.

Ownership note: Iowa Code § 508C.3 measures the $250,000 amount on one life, while the association FAQ uses a contract-owner label. Confirm atypical arrangements involving different owners and annuitants.

Covered contracts measured on one life at one failed insurer share Iowa’s $250,000 annuity amount.

Obligations of separate failed member insurers proceed separately.

Iowa’s $350,000 per-life aggregate combines the covered categories to which it applies, while the annuity category itself remains capped at $250,000.

  • Qualifying governmental-plan participants or specified unallocated accounts may receive up to $250,000.
  • Certain other qualifying plan sponsors owning unallocated annuity contracts may receive up to $5 million.
  • Iowa separately caps the present value protected for an eligible structured-settlement payee at $250,000.

A $300,000 annuity example

Consider an Iowa resident whose single eligible fixed contract has $300,000 in present value after exclusions.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

The statutory reading protects no more than $250,000 of annuity value, leaving $50,000 outside the association amount.

The illustration assumes the claimant and annuity contract satisfy Iowa’s statutory eligibility rules.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Iowa’s $250,000 present-value limit, subject to eligibility requirements and statutory exclusions.

  • Fixed indexed annuity (FIA)

    Generally covered

    Iowa removes excess or forfeitable index value; for a strategy with nonannual crediting, the failure date is treated as the scheduled crediting date.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    Iowa evaluates an eligible MYGA under its fixed-deferred provisions, with a $250,000 annuity ceiling and statutory interest-crediting limits.

  • Variable annuity

    Guaranteed portions may be covered

    Variable market risk is not a covered insurer obligation.

  • Registered index-linked annuity (RILA)

    Contract-specific

    An Iowa RILA contributes only a promise enforceable against the carrier. Price or index exposure borne by the owner does not pass to the association.

  • Unallocated annuity contract

    Limited situations

    Qualifying governmental-plan participants or specified unallocated accounts may receive up to $250,000; certain other qualifying plan sponsors may receive up to $5 million.

Who may qualify?

  • Iowa tests residence when a court order declares the member carrier impaired or insolvent.
  • Eligibility depends on the contract and claimant role, including owners, certificate holders, enrollees, insureds, annuitants, beneficiaries, and structured-settlement payees.
  • A nonresident can qualify if the Iowa-domiciled issuer was unlicensed in the home state and that state’s association therefore does not cover the person.
  • Iowa also supplies a domicile route for certain U.S. citizens abroad and structured-settlement payees.
  • An Iowa resident’s contract must have been issued by a member insurer covered by the chapter.

What is not covered?

  • Nonguaranteed benefits are excluded.
  • Interest above Iowa’s corporate-bond threshold is removed.
  • Transferred structured-settlement rights can be excluded.
  • Certain PBGC-covered and unlisted unallocated arrangements do not qualify.
  • Iowa’s backstop does not answer for marketing torts, misrepresentation damages, penalties, or other extra-contractual relief.

What happens after an insurer fails?

  1. 1

    Insurer enters impairment or insolvency proceedings

    The failure event establishes residence and the applicable law.

  2. 2

    Eligibility is determined

    Iowa checks the owner’s residence, issuer domicile, and home-state licensing gap.

  3. 3

    Covered benefits and limits are calculated

    Eligible value is aggregated under the statutory unit and tested against $250,000 and $350,000.

  4. 4

    Amounts above the limit go to receivership

    The receiver handles any amount beyond the association obligation.

How the guaranty system is financed

Chapter 508C authorizes calls on Iowa member companies when association obligations require funding.

Assessment allocation
Member insurers
Calls follow Chapter 508C accounts and relevant Iowa premiums.
Annual assessment cap
Defined by state law
For each statutory account, Iowa limits a calendar-year assessment to 2% of the carrier’s applicable three-year average of in-state premiums.
Premium-tax treatment
State-specific rule
Iowa permits a member insurer to recover an eligible assessment through five equal annual premium-tax offsets beginning after the payment year.
Iowa statutory accounts
Member-insurer assessments are allocated through Chapter 508C accounts using the applicable Iowa premium base.

What to know before buying

  • Count everything measured on the same life at one issuer and use the statute’s unit for conservative planning.
  • An Iowa agent cannot invoke this association, in speech or writing, to close an insurance sale.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Iowa protection reaches qualifying annuity benefits and specified cross-border claimants.
    FDIC: FDIC insurance reaches qualifying deposit balances rather than insurance benefits.
  • What system stands behind it
    State protection: Iowa protection comes through an industry-funded state guaranty association; annuities are not FDIC-insured.
    FDIC: Federal deposit insurance covers eligible bank balances with the government’s full faith and credit behind it.
  • Coverage-limit basis
    State protection: Iowa’s statutory annuity amount is $250,000 for benefits measured on one life.
    FDIC: Federal limits count deposits by depositor, insured bank, and ownership category.
  • Whether it applies to annuities
    State protection: A qualifying Iowa annuity may receive Chapter 508C protection under the statutory life unit.
    FDIC: No annuity receives FDIC insurance because it is not a deposit account.

Sources and last verified

Last verified: September 2, 2026