State annuity protection

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

Massachusetts 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 ownership, residency, and other statutory requirements.

Massachusetts 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
After the category limits are applied, Massachusetts generally caps covered benefits at $300,000 in the aggregate with respect to one life. For basic hospital expense, basic medical-surgical, or major medical expense insurance, the aggregate may be as high as $500,000 with respect to one individual. The $300,000 aggregate does not increase Massachusetts’ separate $250,000 ordinary annuity limit.
Who provides protection
Massachusetts Life and Health Insurance Guaranty Association
The Massachusetts Life and Health Insurance Guaranty Association is a nonprofit legal entity created by statute, funded through assessments of member insurers, and supervised by the Commissioner of Insurance.
Insurer requirement
Member insurer
The issuing insurer must qualify as a member insurer under Massachusetts law, and the policy or contract must otherwise fall within the coverage provided by G.L. c. 175, § 146B.

How the $250,000 limit works

Massachusetts generally limits covered annuity benefits to $250,000 in present value with respect to one life, including eligible net cash surrender and withdrawal values, subject to ownership and other eligibility requirements.

The $250,000 annuity limit applies with respect to one life, regardless of the number of policies or contracts.

Coverage is generally evaluated separately for each impaired or insolvent member insurer. Residency is determined when the member insurer is determined to be impaired or insolvent under Massachusetts law.

After the category limits are applied, Massachusetts generally caps covered benefits at $300,000 in the aggregate with respect to one life. For basic hospital expense, basic medical-surgical, or major medical expense insurance, the aggregate may be as high as $500,000 with respect to one individual. The $300,000 aggregate does not increase Massachusetts’ separate $250,000 ordinary annuity limit.

  • A qualifying structured-settlement payee, or the beneficiary or beneficiaries 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 the applicable $300,000 aggregate.
  • Basic hospital expense, basic medical-surgical, and major medical expense insurance may be subject to a $500,000 aggregate with respect to one individual; the ordinary annuity-specific limit remains $250,000.

A $300,000 annuity example

Assume an individual owns an eligible fixed annuity with a covered present value of $300,000 at one impaired or insolvent Massachusetts 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 an individually owned eligible annuity, a qualifying claimant and member insurer, and otherwise covered contractual value; it illustrates only the statutory guaranty limit.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    An individually owned fixed annuity may qualify when the contract is otherwise covered and the claimant is the legal owner under the contract or through a valid assignment properly recorded on the insurer’s books.

  • 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, Massachusetts 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 Massachusetts’ $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 policy or contract holder through a separate account are generally excluded.

  • Registered index-linked annuity (RILA)

    Contract-specific

    For a RILA, qualifying insurer-guaranteed contractual 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, except to the extent annuity benefits are specifically guaranteed to an individual.

Who may qualify?

  • Residency is determined at the time the member insurer is determined to be impaired or insolvent under Massachusetts law. An impaired insurer may be identified by a Commissioner determination or a court rehabilitation or conservation order.
  • For contracts other than structured settlements, primary coverage generally follows a qualifying resident owner or certificate holder; beneficiaries, assignees, or payees of that covered person may also receive protection. The statutory owner is the legal owner identified in the contract or a person vested with legal title through a valid assignment completed under the contract and properly recorded on the insurer’s books. A person with only a mere beneficial interest is not the statutory owner.
  • A nonresident may qualify in limited circumstances when the issuing insurer is Massachusetts-domiciled, the person’s state of residence has a similar guaranty association, and the person is not eligible for coverage there because the insurer lacked the required license under that state’s guaranty-association law.
  • Massachusetts’ 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 Massachusetts law, and the policy or contract must otherwise fall within the coverage provided by G.L. c. 175, § 146B.

What is not covered?

  • Portions of a policy or contract that are not guaranteed by the insurer, or under which the policyholder or contract holder bears the risk, are generally excluded.
  • Reinsurance contracts are excluded unless assumption certificates were issued.
  • Trust-owned, corporate-owned, and other non-individually owned annuities are generally excluded, except to the extent a specific annuity benefit is guaranteed to an individual.
  • Interest, crediting rates, or similar factors above Massachusetts’ statutory limits may be excluded.
  • 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 Massachusetts while the member insurer lacked the required license or authority is excluded.
  • A policy or contract, or a portion of one, is excluded to the extent that guaranty-association assessments for it are preempted by federal or state law.
  • Claims based on marketing materials, unauthorized side letters or riders, misrepresentations, bad faith, punitive or exemplary damages, attorneys’ fees and costs, penalties, and consequential or incidental damages are generally excluded.
  • Certain uncredited or forfeitable index-linked amounts may be excluded; if crediting occurs less frequently than annually, Massachusetts applies the statutory deemed-crediting-date calculation as of the earlier impairment or insolvency date.
  • Benefits or services under Medicare Part C or Medicare Part D are excluded.

What happens when an insurer becomes impaired or insolvent?

  1. Impairment or insolvency status is established

    For an impaired member insurer, the Association may, in its discretion and with the Commissioner’s approval, guarantee, assume, or reinsure policies or provide financial support. For an insolvent member insurer, the Association must provide protection through one of the methods authorized by § 146B(8).

  2. Residency and claimant eligibility are determined

    Residency is determined at the time the member insurer is determined to be impaired or insolvent; Massachusetts permits impairment to arise through a Commissioner determination or a court rehabilitation or conservation order.

  3. Ownership, insurer status, and contract eligibility are reviewed

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

  4. Covered benefits and applicable limits are determined

    For ordinary annuities, the Association applies the $250,000 present-value annuity limit and then the applicable $300,000 aggregate; amounts above guaranty protection may remain claims against the insurer’s receivership estate.

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 the statutory health, life-insurance, and annuity accounts and among member insurers based generally on covered Massachusetts premiums during the most recent three calendar years for which information is available preceding the impairment or insolvency year.
Annual assessment cap
Defined by state law
Annual assessment cap — 2%. For each account, total assessments against a member insurer in one calendar year generally cannot exceed 2% of its average annual Massachusetts premiums on covered policies 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 — 10% per year for five years. A qualifying assessment other than a Class A assessment may offset Massachusetts premium, excise, franchise, or income tax liability by 10% of the assessment in each of the five calendar years following payment, subject to the $3 million statewide annual cap. The statutory schedule therefore provides offsets totaling up to 50% of the assessment, subject to the cap and carryforward mechanism.
Funding does not change coverage
How the Association is funded does not change consumer coverage limits; eligible benefits remain subject to the statutory exclusions and dollar caps in § 146B.

What to know before buying

  • Massachusetts generally excludes annuities not issued to and owned by an individual. Valid assignments must comply with the contract and be properly recorded; trust-owned or other non-individually owned annuities are generally excluded except for specifically guaranteed individual benefits.
  • Section 146B(19) prohibits any person, including an insurer, agent, or affiliate, from using the existence of the Massachusetts Life and Health Insurance Guaranty Association in advertising, sales, solicitation, or inducement to purchase covered insurance.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Massachusetts guaranty protection may apply to eligible contractual annuity benefits issued by member insurers, subject to statutory ownership, eligibility, and coverage rules.
    FDIC: FDIC insurance covers eligible bank deposits; annuities are not FDIC-insured deposits.
  • What system stands behind it
    State protection: The Massachusetts Life and Health Insurance Guaranty Association is a nonprofit legal entity created by statute and funded through assessments of member insurers; it is supervised by the Commissioner of Insurance.
    FDIC: The FDIC administers federal deposit insurance for eligible deposits at insured banks.
  • Coverage-limit basis
    State protection: Massachusetts generally provides up to $250,000 in present-value annuity benefits with respect to one life at an impaired or insolvent member insurer, subject to the $300,000 aggregate and other statutory rules.
    FDIC: Federal limits depend on the depositor’s ownership capacity at each insured bank.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Massachusetts guaranty association protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: FDIC insurance applies to eligible bank deposits, not annuity contracts.

Sources and last verified

Last verified: October 6, 2026