State annuity protection

Michigan Annuity Guaranty Protection: $250,000 Limit Explained

Michigan generally provides up to $250,000 in protection for the present value of covered annuity benefits, subject to eligibility requirements and statutory exclusions.

Michigan annuity protection at a glance

Annuity benefit limit
$250,000
Michigan converts the insurer-guaranteed annuity obligation to present value and counts qualifying cash available on surrender or withdrawal.
Overall benefit cap
$300,000
Most covered benefit types share a $300,000 per-life aggregate, but that broader cap does not increase the $250,000 annuity-specific limit.
Who provides protection
Michigan Life and Health Insurance Guaranty Association
The Michigan Life & Health Insurance Guaranty Association supports covered obligations of licensed member insurers after the statutory activation event.
Insurer requirement
Member insurer
An issuer outside the member-insurer class receives no Michigan guaranty protection.

How the $250,000 limit works

Michigan combines covered surrender and withdrawal values into present value, then stops the annuity benefit for the affected life at $250,000 for that company.

Three contracts on one life do not create three limits; Michigan combines them at the failed insurer.

Contracts issued by another member company are evaluated in that company’s separate insolvency.

Most covered benefit types share a $300,000 per-life aggregate, but that broader cap does not increase the $250,000 annuity-specific limit.

A $300,000 annuity example

Assume one life supports a covered $300,000 fixed-annuity value at the same insolvent Michigan carrier.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

Michigan aggregates the $300,000 contract value and limits the annuity claim to $250,000.

The illustration assumes current law applies and does not estimate liquidation dividends.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    A fixed annuity qualifies only if issued by a Michigan member insurer and otherwise covered by Chapter 77.

  • Fixed indexed annuity (FIA)

    Generally covered

    Michigan may leave nonguaranteed or forfeitable FIA value outside protection. For contracts with a crediting interval longer than one year, the statute calculates value as though the trigger date were the scheduled crediting date.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGAs are generally covered as fixed deferred annuities, although interest above Michigan’s statutory interest-rate limit may be excluded.

  • Variable annuity

    Guaranteed portions may be covered

    The owner bears separate-account investment risk in a variable annuity; an eligible general-account guarantee can be considered separately.

  • Registered index-linked annuity (RILA)

    Contract-specific

    Michigan separates a RILA’s market-linked separate-account result from a qualifying general-account promise before applying the annuity maximum.

  • Unallocated annuity contract

    Limited situations

    Covered employer-plan or government-lottery unallocated arrangements have a separate $5 million contract-holder limit; other unallocated contracts are excluded.

Who may qualify?

  • Michigan’s public guidance measures residence when the liquidation order activates the association.
  • Coverage is organized around the life and eligible owner identified by the contract.
  • A former Michigan buyer normally looks to the association in the state of residence at activation.
  • Michigan’s domiciliary role can matter for a nonresident whose home-state association cannot cover an insurer not licensed there.
  • An issuer outside the member-insurer class receives no Michigan guaranty protection.

What is not covered?

  • Fraternal societies, HMOs, specified nonprofit health entities, and charitable-gift-annuity organizations are outside association membership.
  • Separate-account value and other owner-borne risk are not guaranteed.
  • Interest above Michigan’s statutory benchmark may be excluded.
  • Michigan may omit index value that remains unvested at the trigger, while applying a separate calculation to contracts with longer crediting intervals.

What happens after an insurer fails?

  1. 1

    Regulatory proceeding

    A troubled carrier may enter rehabilitation while courts restrict payments or surrender access.

  2. 2

    Activation date

    A court’s insolvency finding and liquidation order fixes the governing Michigan law and residence analysis.

  3. 3

    Six-part review

    Membership, contract type, residence, trigger date, benefit measure, and exclusions are checked before payment.

  4. 4

    Receiver distributes assets

    Contract value above the guaranty claim remains eligible for whatever the failed estate can return.

How the guaranty system is financed

The association calls assessments from surviving Michigan member insurers when covered failures require funding.

Assessment allocation
Member insurers
Michigan assigns assessment responsibility through statutory accounts and relevant premium volume.
Annual assessment cap
Defined by state law
For an account or subaccount, Michigan limits a year’s assessment to 2% of the member’s average covered in-state premiums over the prior three years.
Premium-tax treatment
State-specific rule
Michigan allows an insurance-company tax credit for qualifying amounts paid to the Michigan Life and Health Insurance Guaranty Association, subject to the statutory tax rules.
Chapter 77 member assessments
Assessments supplement assets controlled by the receiver; they do not cover excluded interest or market risk.

What to know before buying

  • Check the carrier’s Michigan license and your total exposure on one life before using the $250,000 figure.
  • Michigan expressly prohibits misrepresenting the nature or extent of guaranty-association coverage. Unlike many states, Chapter 77 does not state a separate rule specifically barring use of the association for sales or solicitation.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Michigan coverage reaches a guaranteed annuity obligation from a Chapter 77 member insurer.
    FDIC: FDIC coverage reaches a customer’s qualifying deposit balance.
  • What system stands behind it
    State protection: The Michigan Life & Health Insurance Guaranty Association is a private, industry-funded association and is not a state agency.
    FDIC: The United States government pledges its full faith and credit to federally insured bank deposits.
  • Coverage-limit basis
    State protection: Michigan combines contracts for one life at one insolvent company under $250,000 and its broader aggregate.
    FDIC: Federal deposit limits aggregate accounts by owner category at a particular bank.
  • Whether it applies to annuities
    State protection: A covered Michigan annuity can receive association benefits, while the contract remains outside FDIC insurance.
    FDIC: The FDIC insures eligible bank deposits rather than annuities sold by banks or insurers.

Sources and last verified

Last verified: August 25, 2026