State annuity protection

Maryland Annuity Guaranty Protection: $250,000 Limit Explained

Maryland uses one $250,000 present-value ceiling whether an annuity is still accumulating or has begun paying income.

Maryland annuity protection at a glance

Annuity benefit limit
$250,000
Present value of covered annuity benefits, whether represented by deferred cash value or a remaining income stream.
Overall benefit cap
$300,000
Maryland combines most covered life, annuity, disability, long-term-care, and related benefits under a $300,000 per-life aggregate. A qualifying health benefit plan can reach $500,000.
Who provides protection
Maryland Life and Health Insurance Guaranty Corporation
The Maryland Life and Health Insurance Guaranty Corporation is a private, nonprofit corporation that provides statutory protection for covered obligations of member insurers.
Insurer requirement
Member insurer
The issuer must fall within Maryland’s member-insurer definition for the corporation to cover its obligations.

How the $250,000 limit works

Maryland does not provide a separate higher guaranty limit simply because an annuity has begun making income payments.

Multiple contracts associated with one life at one failed carrier are combined before the product and aggregate ceilings are applied.

Coverage limits are generally applied separately to each failed member insurer, subject to Maryland’s eligibility and residency rules.

Maryland combines most covered life, annuity, disability, long-term-care, and related benefits under a $300,000 per-life aggregate. A qualifying health benefit plan can reach $500,000.

  • Maryland permits up to $500,000 for covered benefits under a qualifying health benefit plan.
  • For an eligible Maryland structured settlement, one payee or beneficiary has a $250,000 present-value ceiling.

A $300,000 annuity example

Assume a Maryland resident owns one covered fixed annuity with $300,000 in present value and no other benefit at that insurer.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

Maryland applies the same annuity ceiling without creating a higher payout-status tier.

The example holds valuation assumptions constant; actual payout present value must be determined in the proceeding.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    A deferred fixed annuity is measured by its covered present value, including surrender and withdrawal value.

  • Fixed indexed annuity (FIA)

    Generally covered

    Maryland excludes index-linked gains that remain uncredited or forfeitable at impairment or insolvency. If a strategy credits less frequently than annually, the statute treats that date as the contractual crediting date when calculating accrued value.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    In Maryland, a MYGA generally receives fixed-deferred-annuity treatment; the $250,000 ceiling and statutory interest-rate restrictions still apply.

  • Variable annuity

    Guaranteed portions may be covered

    Investment performance allocated to a variable separate account is not an insurer-guaranteed obligation.

  • Registered index-linked annuity (RILA)

    Contract-specific

    For a Maryland RILA, the corporation evaluates the carrier’s enforceable floor or other guarantee; market loss assigned to the owner is not converted into coverage.

  • Unallocated annuity contract

    Generally excluded

    Unallocated arrangements require their own statutory analysis and should not be assumed to share individual-annuity treatment.

Who may qualify?

  • For Maryland coverage, the claimant’s residence is measured when the court orders that the member carrier is impaired or insolvent.
  • For ordinary annuity contracts, coverage generally follows the eligible owner, certificate holder, enrollee, beneficiary, assignee, or payee as provided under Maryland law.
  • Maryland’s domicile fallback can reach a nonresident whose home jurisdiction has a comparable association but denies the claim because the failed carrier was not properly licensed there.
  • The failed insurer’s domicile becomes relevant when no association in the owner’s residence can respond.
  • The issuer must fall within Maryland’s member-insurer definition for the corporation to cover its obligations.

What is not covered?

  • Nonguaranteed benefits and investment risk retained by the contract owner are excluded.
  • Interest above Maryland’s corporate-bond-yield formula does not enter the protected amount.
  • Amounts above the applicable $250,000 annuity limit or $300,000 aggregate are not covered by the Guaranty Corporation, although they may remain claims against the failed insurer’s estate.
  • Corporation coverage does not extend to Maryland sales allegations, misrepresentation theories, side promises, contract-external remedies, penalties, or indirect damages.

What happens after an insurer fails?

  1. 1

    Insurer enters impairment or insolvency proceedings

    The Corporation can participate during impairment or rehabilitation, while insolvency and liquidation create stronger statutory duties.

  2. 2

    Coverage eligibility is determined

    Residence, claimant role, contract type, and member-insurer status are checked.

  3. 3

    Present value is determined

    Deferred value or remaining payout benefits are measured under the same $250,000 provision.

  4. 4

    Amounts above the limit go to receivership

    The Maryland receiver records value beyond the corporation’s ceiling as an estate claim; any further recovery depends on estate assets.

How the guaranty system is financed

Member insurers fund the Maryland corporation through statutory assessments when covered failures create obligations.

Assessment allocation
Member insurers
Assessment responsibility follows the accounts and premium classes established in Maryland law.
Annual assessment cap
Defined by state law
Maryland caps total assessments against a member insurer at 2% per account in a calendar year, measured from the insurer’s Maryland premiums on policies covered by that account.
Premium-tax treatment
State-specific rule
No statutory premium-tax offset was identified; contribution-certificate treatment applies. Under § 9-409, the corporation issues a certificate of contribution that a member insurer may carry as a financial-statement asset in the form, amount, and period approved by the Commissioner.
How member assessments work
Member-insurer assessments help fund covered obligations, while assets recovered from the failed insurer may also contribute to policyholder recoveries.

What to know before buying

  • Annuitizing a contract does not create a separate higher Maryland guaranty limit; deferred and payout-stage annuity benefits remain subject to the applicable statutory limits.
  • Insurance § 9-414(f) bars sellers from using corporation protection to market insurance or HMO coverage; Maryland’s notice also warns purchasers against choosing a carrier on that basis.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Maryland can cover the guaranteed present value of a deferred or paying annuity.
    FDIC: The FDIC protects eligible deposit balances, not an insurer’s payment stream.
  • What system stands behind it
    State protection: The Maryland Life and Health Insurance Guaranty Corporation is a private, nonprofit corporation that provides statutory protection for covered obligations of member insurers; it is not a State agency or instrumentality.
    FDIC: FDIC insurance is federal deposit insurance for eligible deposits at insured banks.
  • Coverage-limit basis
    State protection: Maryland’s annuity-benefit ceiling is generally $250,000 for one life, subject to a $300,000 aggregate across most covered benefit categories.
    FDIC: Deposit coverage is computed by depositor, institution, and federal ownership category.
  • Whether it applies to annuities
    State protection: A qualifying Maryland annuity may receive corporation protection and does not receive FDIC insurance.
    FDIC: A qualifying deposit at an insured bank—not an annuity—can receive FDIC coverage.

Sources and last verified

Last verified: September 3, 2026