State annuity protection

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

Maryland 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. The same annuity-specific ceiling applies whether the contract is deferred or already paying income.

Maryland 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, whether benefits are deferred or already in payout.
Overall benefit cap
$300,000
Maryland generally applies a $300,000 aggregate with respect to one life across the life-insurance, health-insurance, annuity, and structured-settlement benefit categories listed in § 9-407(k)(3). Qualifying health-benefit-plan benefits are instead subject to a $500,000 aggregate. The $300,000 aggregate does not increase Maryland’s separate $250,000 ordinary annuity limit.
Who provides protection
Maryland Life and Health Insurance Guaranty Corporation
The Maryland Life and Health Insurance Guaranty Corporation is a private, nonprofit, nonstock corporation created by statute, supervised by the Insurance Commissioner, and expressly not a department, unit, agency, or instrumentality of the State.
Insurer requirement
Member insurer
The issuing insurer must qualify as a member insurer under Maryland law, and the policy or contract must otherwise be covered under Title 9, Subtitle 4.

How the $250,000 limit works

Maryland does not create a higher annuity guaranty limit merely because a deferred annuity has entered the payout stage; the same $250,000 present-value annuity limit applies.

Multiple annuity policies or contracts with respect to the same life at the same impaired or insolvent member insurer share Maryland’s $250,000 annuity-specific limit and applicable aggregate.

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

Maryland generally applies a $300,000 aggregate with respect to one life across the life-insurance, health-insurance, annuity, and structured-settlement benefit categories listed in § 9-407(k)(3). Qualifying health-benefit-plan benefits are instead subject to a $500,000 aggregate. The $300,000 aggregate does not increase Maryland’s separate $250,000 ordinary annuity limit.

  • Qualifying health-benefit-plan benefits may be subject to a $500,000 aggregate with respect to one life; Maryland’s ordinary annuity-specific limit remains $250,000.
  • A qualifying structured-settlement payee, or the beneficiary of a deceased payee, may receive up to $250,000 in aggregate present-value annuity benefits, including eligible net cash surrender and withdrawal values, subject to Maryland’s applicable aggregate rules.

A $300,000 annuity example

Assume a Maryland resident owns an eligible fixed annuity with a covered present value of $300,000 at one impaired or insolvent member insurer and has no other covered benefits affecting the aggregate.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

In this example, the same $250,000 annuity limit applies whether the contract is still deferred or already making income payments.

The example is illustrative only; the covered present value of any remaining payout benefits would be determined under the contract and applicable guaranty-association rules.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Maryland’s $250,000 present-value annuity limit with respect to one life, including eligible net cash surrender and withdrawal values, subject to statutory exclusions.

  • Fixed indexed annuity (FIA)

    Generally covered

    FIAs are generally covered to the extent of qualifying insurer-guaranteed benefits. Certain uncredited or forfeitable index-linked amounts may be excluded; however, when value is credited less frequently than annually, Maryland calculates the value as though the earlier impairment or insolvency date were the contractual crediting date and treats the resulting amount as credited and nonforfeitable.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGAs are generally treated as fixed deferred annuities and are subject to Maryland’s $250,000 present-value 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

    Generally excluded

    An annuity contract or group annuity certificate not issued to and owned by an individual is generally excluded, including unallocated funding agreements, unallocated annuity benefits, deposit-administration contracts, and GIC accounts, except to the extent annuity benefits are specifically guaranteed to an individual.

Who may qualify?

  • Residency is determined on the date of entry of a court order determining the member insurer to be impaired or insolvent and is tied to the person to whom the contractual obligation is owed.
  • For contracts other than structured settlements, primary coverage generally follows a qualifying resident owner, certificate holder, or enrollee. A beneficiary, assignee, or payee of that covered person may also receive protection regardless of that person’s residence. Maryland defines the owner as the legal owner named in the contract or a person vested with legal title through a valid assignment completed under the contract and properly recorded on the member insurer’s books; a person with only a beneficial interest is not the statutory owner.
  • A nonresident may qualify in limited circumstances when the issuing insurer is Maryland-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.
  • Maryland’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 Maryland law, and the policy or contract must otherwise be covered under Title 9, Subtitle 4.

What is not covered?

  • Portions of a policy or contract that are not guaranteed by the member insurer, or under which the policyholder or contract holder bears the risk, are generally excluded from guaranty protection.
  • Reinsurance contracts are excluded unless assumption certificates were issued.
  • Interest, crediting rates, or similar factors above Maryland’s statutory limits based on Moody’s Corporate Bond Yield Average may be excluded from guaranty protection.
  • Self-funded or uninsured employer and association plans are excluded.
  • Dividends, experience-rating credits, fees, and allowances paid in connection with policy or contract administration are excluded.
  • A policy or contract issued in Maryland while the member insurer lacked the required license or certificate of authority is excluded.
  • Unallocated annuity and GIC arrangements are generally excluded, except to the extent annuity benefits are specifically guaranteed to an individual.
  • 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.
  • Benefits or services under Medicare Part C, Medicare Part D, or Medicaid are excluded.
  • A person who acquires the right to receive structured-settlement payments through a structured-settlement factoring transaction is not eligible for Maryland guaranty protection for those transferred rights.
  • Amounts above the applicable guaranty limits are not payable by the Corporation but may remain claims against the impaired or insolvent insurer’s receivership estate, with any additional recovery depending on available estate assets.

What happens when an insurer becomes impaired or insolvent?

  1. The insurer becomes impaired or insolvent

    For an impaired insurer, the Corporation may guarantee, assume, reissue, or reinsure covered policies or contracts and may provide financial support with the Commissioner’s approval. For an insolvent insurer, the Corporation may use the protection methods authorized by § 9-407(b).

  2. Claimant, insurer, and contract eligibility are determined

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

  3. Covered contractual benefits and applicable limits are determined

    For ordinary annuities, Maryland applies the same $250,000 present-value limit whether benefits are deferred or already in payout, then applies the applicable $300,000 aggregate across the statutory benefit categories.

  4. Amounts above guaranty protection may remain in receivership

    Amounts above the Corporation’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 Corporation is funded primarily through statutory 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 Maryland’s health, life-insurance, and annuity accounts and among member insurers based generally on covered Maryland premiums for the most recent calendar year for which information is available before the year of impairment or insolvency, subject to § 9-409’s allocation rules.
Annual assessment cap
Defined by state law
Annual assessment cap — 2%. In a calendar year, total assessments against a member insurer for each account may not exceed 2% of that insurer’s Maryland premiums on policies covered by that account.
Premium-tax treatment
State-specific rule
Premium-tax treatment — current Title 9, Subtitle 4 does not provide a guaranty-association assessment premium-tax offset. Instead, § 9-409 requires a certificate of contribution, which the member insurer may report as a financial-statement asset in the form, amount, and period approved by the Commissioner.
Assessments, insurer assets, and subrogation
Member-insurer assessments fund the Corporation’s statutory obligations, while assets of the impaired or insolvent insurer and the Corporation’s subrogation rights also form part of the receivership and recovery process.

What to know before buying

  • Annuitizing a contract does not create a higher Maryland guaranty limit; deferred and payout-stage annuity benefits remain subject to the same $250,000 annuity-specific ceiling.
  • Insurance § 9-414(f) makes use of guaranty-corporation protection in the sale of insurance or HMO coverage a prohibited unfair method of competition. COMAR 31.04.14.03 prescribes a notice for policies or contracts that exceed the statutory limits or are not covered; the notice also states that buyers should not rely on Corporation coverage when selecting an insurer or HMO.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Maryland guaranty protection may apply to eligible insurer-guaranteed contractual annuity benefits, whether the annuity is deferred or already paying income.
    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, nonstock corporation created by statute and is expressly not a department, unit, agency, or instrumentality of the State.
    FDIC: FDIC insurance is federal deposit insurance for eligible deposits at insured banks.
  • Coverage-limit basis
    State protection: Maryland generally provides up to $250,000 in present-value annuity benefits with respect to one life, subject to the $300,000 aggregate across the benefit categories specified in § 9-407(k)(3), except for the $500,000 health-benefit-plan aggregate.
    FDIC: Deposit coverage is computed by depositor, institution, and federal ownership category.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Maryland Guaranty Corporation protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: A qualifying deposit at an insured bank—not an annuity—can receive FDIC coverage.

Sources and last verified

Last verified: October 6, 2026