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 with respect to one life, subject to eligibility requirements, statutory exclusions, and a separate $300,000 general aggregate.

Michigan annuity protection at a glance

Annuity benefit limit
$250,000
Present value of covered annuity benefits, including qualifying net cash surrender and net cash withdrawal values.
Overall benefit cap
$300,000
Most covered benefits are subject to a $300,000 aggregate with respect to one life. A separate $500,000 aggregate applies to qualifying basic hospital, medical, and surgical benefits; neither aggregate increases the $250,000 annuity-specific limit.
Who provides protection
Michigan Life and Health Insurance Guaranty Association
The Michigan Life and Health Insurance Guaranty Association (MLHIGA) provides statutory protection for covered obligations of impaired or insolvent member insurers.
Insurer requirement
Member insurer
The issuing insurer must qualify as a member insurer under Michigan law for the policy or contract to receive MLHIGA protection.

How the $250,000 limit works

The $250,000 limit applies to the present value of covered annuity benefits, including eligible net cash surrender and withdrawal values.

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

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

The $300,000 general aggregate does not increase Michigan’s $250,000 annuity-specific limit.

  • Michigan permits a $500,000 combined cap for qualifying basic hospital, medical-surgical, or major-medical benefits with respect to one life.
  • A Michigan resident participant in a qualifying governmental retirement plan funded through an unallocated annuity may receive up to $250,000 in present-value benefits.
  • For another qualifying covered unallocated annuity, Michigan caps benefits at $5 million for one contract owner or sponsoring plan, regardless of the number of contracts.
  • Michigan provides a separate $250,000 present-value ceiling for each qualifying structured-settlement payee or beneficiary of a deceased payee.

A $300,000 annuity example

Assume an eligible fixed annuity has a present value of $300,000 with one insolvent Michigan 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 MLHIGA protection, while the remaining $50,000 may remain a claim against the insurer’s receivership estate.

This illustration uses the current statutory limits and does not estimate the timing or amount of any additional receivership recovery.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Michigan’s $250,000 present-value annuity limit, subject to the member-insurer requirement, eligibility rules, and 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, Michigan determines the value as though the earlier of the impairment or insolvency date were the contractual crediting date.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGAs are generally covered as fixed deferred annuities, subject to Michigan’s $250,000 annuity limit and statutory interest-rate restrictions.

  • Variable annuity

    Guaranteed portions may be covered

    A variable annuity may receive protection only for qualifying benefits guaranteed by the insurer. Investment results carried in a separate account generally remain the contract owner’s risk and are excluded.

  • Registered index-linked annuity (RILA)

    Contract-specific

    For a RILA, Michigan may protect qualifying obligations guaranteed by the insurer. The market- or index-linked portion that leaves investment risk with the contract owner is generally excluded.

  • Unallocated annuity contract

    Limited situations

    Unallocated annuity contracts are covered in limited circumstances. Eligible participants in qualifying governmental retirement plans may receive up to $250,000 each, while certain other qualifying contract owners or plan sponsors may receive up to $5 million. Government-lottery arrangements can also qualify under separate eligibility rules. Unallocated annuities funding employee benefit plans protected by the PBGC are excluded.

Who may qualify?

  • Residency is generally determined when the member insurer is determined to be impaired or insolvent under Michigan law.
  • For ordinary annuities, eligibility generally follows the qualifying owner or certificate holder, while the $250,000 benefit limit is stated with respect to one life.
  • A person who moves from Michigan will generally look to the guaranty association in the state where the person resides at the relevant impairment or insolvency determination, subject to Michigan’s special nonresident rules.
  • A nonresident may qualify in limited circumstances when the insurer is Michigan-domiciled and the person is not eligible for coverage from the guaranty association in the state of residence because the insurer was not licensed there as required by that state’s law.

What is not covered?

  • Policies issued by fraternal benefit societies, HMOs, specified nonprofit health or dental entities, mandatory state pooling plans, certain mutual assessment arrangements, insurance exchanges, and organizations limited to charitable gift annuities are generally outside MLHIGA coverage.
  • Portions of a policy or contract where the policy or contract owner bears the investment risk, including nonguaranteed separate-account value, are generally excluded.
  • Interest, crediting rates, or similar factors above Michigan’s statutory limits may be excluded from guaranty protection.
  • Certain uncredited or forfeitable index-linked amounts may be excluded. If the contract credits index-linked value less frequently than annually, Michigan calculates the value as though the earlier of the impairment or insolvency date were the contractual crediting date and treats that amount as credited and nonforfeitable.
  • Nonguaranteed dividends, reinsurance without an assumption certificate, obligations outside the express written contract terms, self-funded employer plans, PBGC-protected unallocated-annuity plans, and Medicare Part C or Part D benefits are generally excluded.

What happens when an insurer becomes impaired or insolvent?

  1. 1

    Rehabilitation or conservation may begin

    A financially troubled member insurer may enter rehabilitation or conservation. Michigan law allows, and in specified circumstances requires, MLHIGA to take certain actions for an impaired insurer before liquidation, including support for periodic annuity payments or hardship withdrawals.

  2. 2

    Relevant impairment or insolvency date

    The relevant impairment or insolvency determination affects residency, eligibility, and the statutory rules applicable to the claim.

  3. 3

    Coverage eligibility is reviewed

    MLHIGA reviews the insurer’s membership, the type of policy or contract, the claimant’s eligibility and residence, the covered benefit, and applicable statutory exclusions and limits.

  4. 4

    Amounts above guaranty protection remain in receivership

    Amounts above MLHIGA’s protection may remain claims against the insolvent insurer’s receivership estate, with any additional recovery depending on available estate assets and the receivership process.

How the guaranty system is financed

MLHIGA is funded primarily through assessments of member insurers when funds are needed to meet covered obligations.

Assessment allocation
Member insurers
Member-insurer assessments are allocated among Michigan’s statutory accounts and subaccounts based on applicable Michigan premiums and the assessment rules in Chapter 77.
Annual assessment cap
2%
For each applicable account or subaccount, Michigan caps a member insurer’s assessment in a calendar year at 2% of its average annual Michigan premiums on covered policies during the three calendar years preceding the year in which the insurer became impaired or insolvent.
Premium-tax treatment
Insurance-company tax credit
Michigan allows an insurance-company tax credit for qualifying amounts paid to MLHIGA. The credit is calculated using assessments paid in the immediately preceding tax year, subject to MCL 206.637.
Funding does not change coverage limits
Assessment funding does not expand consumer coverage. Eligible benefits remain subject to Michigan’s statutory exclusions, interest-rate restrictions, annuity limit, and aggregate limits.

What to know before buying

  • Michigan’s $250,000 figure applies to covered annuity benefits with respect to one life at one insolvent member insurer, and actual coverage also depends on the insurer’s membership and the contract’s eligibility.
  • Michigan law prohibits misrepresenting the nature or extent of guaranty-association coverage in insurance sales materials or presentations.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Michigan guaranty protection may apply to covered contractual obligations under an eligible annuity issued by a Chapter 77 member insurer.
    FDIC: FDIC insurance applies to qualifying deposit balances at insured banks.
  • What system stands behind it
    State protection: MLHIGA is a nonprofit legal entity created by statute, funded through member-insurer assessments, and is not a state agency.
    FDIC: Eligible bank deposits in the federal deposit-insurance program are backed by the full faith and credit of the United States government.
  • Coverage-limit basis
    State protection: Michigan generally provides up to $250,000 in present-value annuity benefits with respect to one life at one insolvent insurer, subject to the applicable $300,000 general aggregate.
    FDIC: Federal deposit limits aggregate eligible accounts by ownership category at each insured bank.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive state guaranty association protection, but annuity contracts are not deposits and are not insured by the FDIC.
    FDIC: FDIC insurance covers eligible bank deposits rather than annuity contracts.

Sources and last verified

Last verified: September 24, 2026