State annuity protection

Montana Annuity Guaranty Protection: $250,000 Limit Explained

Montana 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 eligibility requirements and statutory exclusions.

Montana 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
Montana generally caps benefits at $300,000 in the aggregate with respect to one life across the ordinary per-life, governmental-plan-participant, and structured-settlement categories. Qualifying health-insurance coverage may instead be subject to a $500,000 aggregate with respect to one individual. The $300,000 aggregate does not increase Montana’s separate $250,000 ordinary annuity limit.
Who provides protection
Montana Life and Health Insurance Guaranty Association
The Montana 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. It may act for an impaired member insurer and has specified duties for an insolvent member insurer.
Insurer requirement
Member insurer
The issuing insurer must qualify as a member insurer under Montana law, and the policy or contract must otherwise be covered under Part 2.

How the $250,000 limit works

Montana generally limits covered annuity benefits to $250,000 in present value with respect to one life. The separate $300,000 aggregate does not increase that annuity-specific limit.

Ownership note: Montana’s statute states the ordinary annuity limit with respect to one life, while the Association FAQ illustrates annuity protection as $250,000 per owner per member company. The statutory per-life formulation is the primary rule. Montana defines the owner as the person identified as legal owner under the contract, or vested with legal title through a valid assignment completed under the contract and properly recorded on the insurer’s books; a mere beneficial interest is not ownership. Unusual owner, annuitant, or joint-owner arrangements may require case-specific review.

Multiple annuity policies or contracts with respect to the same life at the same impaired or insolvent member insurer share Montana’s $250,000 ordinary annuity limit.

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

Montana generally caps benefits at $300,000 in the aggregate with respect to one life across the ordinary per-life, governmental-plan-participant, and structured-settlement categories. Qualifying health-insurance coverage may instead be subject to a $500,000 aggregate with respect to one individual. The $300,000 aggregate does not increase Montana’s separate $250,000 ordinary annuity limit.

  • 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 Montana’s applicable $300,000 aggregate and separate residency and interstate-coordination rules.
  • An individual participating in a governmental retirement plan established under IRC sections 401, 403(b), or 457 and covered by an unallocated annuity contract 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.
  • Certain other qualifying unallocated-annuity contract owners or plan sponsors may receive up to $5 million in aggregate benefits, regardless of the number of qualifying contracts, subject to Montana’s principal-place-of-business and other eligibility rules.
  • Qualifying health-insurance coverage may be subject to a $500,000 aggregate with respect to one individual; Montana’s ordinary annuity-specific limit remains $250,000.

A $300,000 annuity example

Assume an eligible fixed annuity has a covered present value of $300,000 with respect to one life at one impaired or insolvent Montana 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. The separate $300,000 aggregate does not increase the annuity-specific limit.

This illustration applies only the statutory guaranty limit and does not estimate the timing or amount of any additional recovery from the insurer’s receivership estate.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Montana’s $250,000 present-value annuity limit with respect to one life, subject to eligibility requirements and statutory exclusions.

  • 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, Montana 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 Montana’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 contractual obligations may be covered, while portions where the contract owner bears market or index risk are generally excluded.

  • Unallocated annuity contract

    Limited situations

    Unallocated annuity contracts are covered only in specified circumstances. Participants in qualifying governmental 401, 403(b), or 457 plans may receive up to $250,000 each, while certain other qualifying contract owners or plan sponsors may receive up to $5 million in aggregate benefits. A benefit specifically guaranteed to an individual is not treated as unallocated to that extent.

Who may qualify?

  • Residency is determined on the date of entry of a court order determining the member insurer to be impaired or insolvent.
  • Eligibility depends on the claimant’s role under the covered policy or contract. Ordinary coverage generally follows qualifying owners, certificate holders, or enrollees, while beneficiaries, assignees, payees, structured-settlement claimants, and unallocated-annuity owners or plan sponsors follow the specific rules in §33-10-224.
  • A nonresident may qualify in limited circumstances when the issuing insurer is Montana-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.
  • Montana’s interstate-coordination rules are designed to provide protection through only one state guaranty association and prevent duplicate coverage for the same obligation. Structured-settlement annuities use separate residency and interstate-coordination rules; a qualifying resident payee can receive coverage regardless of where the contract owner resides.
  • The issuing insurer must qualify as a member insurer under Montana law, and the policy or contract must otherwise be covered under Part 2.

What is not covered?

  • Portions of a policy or contract that are not guaranteed by the member insurer, or under which the policy or contract owner bears the risk, are generally excluded. Certain uncredited or forfeitable index-linked amounts are also excluded, subject to Montana’s special rule for crediting less frequently than annually.
  • Structured-settlement payment rights acquired through a structured-settlement factoring transaction are excluded from Montana guaranty protection.
  • Self-funded or uninsured benefit arrangements, owner-borne investment risk, interest or crediting above Montana’s statutory limits, and obligations not arising from the express written terms of the policy or contract are generally excluded.
  • Reinsurance without an assumption certificate, dividends, experience-rating credits, voting rights, fees and allowances, and policies issued in Montana while the insurer lacked authority to issue them are generally excluded.
  • PBGC-protected unallocated-annuity plans, unallocated contracts outside qualifying benefit-plan or government-lottery arrangements, and book-value accounting guarantees are generally excluded.
  • Claims based on marketing materials, unauthorized side letters or riders, misrepresentations, extra-contractual claims, penalties, and consequential or incidental damages are generally excluded.
  • Medicare Part C or D and Medicaid benefits are excluded from Montana guaranty protection.

What happens after an insurer fails?

  1. Claimant, insurer, and contract eligibility are reviewed

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

  2. Impairment or insolvency status is established

    A court order of rehabilitation or supervision establishes an impaired insurer, while a liquidation order with a finding of insolvency establishes an insolvent insurer. The relevant court order also determines the residency date.

  3. Covered contractual benefits and applicable limits are determined

    For ordinary annuities, the Association determines the covered contractual obligation after applying statutory exclusions, then applies the $250,000 annuity-specific limit and the applicable $300,000 aggregate.

  4. Amounts above guaranty protection may remain in receivership

    Amounts above the Association’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 Association is funded primarily through Class A and Class B assessments of member insurers when funds are needed to carry out its statutory duties.

Assessment allocation
Member insurers
Class B assessments are allocated among Montana’s statutory accounts and subaccounts and among member insurers based generally on covered Montana premiums during the applicable three-year period, subject to §33-10-227’s allocation rules.
Annual assessment cap
Defined by state law
Annual assessment cap — 2%. For each life-and-annuity subaccount and the health account, total annual assessments generally cannot exceed 2% of the member insurer’s average annual Montana premiums on covered policies and contracts during the three calendar years preceding the year in which the affected insurer became impaired or insolvent.
Premium-tax treatment
State-specific rule
Premium-tax treatment — a qualifying Class B contribution certificate is carried at 100% in the issuance year, then 80%, 60%, 40%, and 20% in the next four calendar years; the amount written off each year may be offset against Montana premium-tax liability. This produces an effective 20%-per-year writeoff schedule, subject to any longer period approved by the Commissioner.
Plan-sponsor location
For a benefit-plan unallocated annuity, coverage generally follows the plan sponsor’s principal place of business. Montana generally treats that as the state where more than 50% of plan participants are employed, with additional statutory rules when no state has a majority.

What to know before buying

  • Annuity guaranty protection is governed by Montana’s Life and Health Insurance Guaranty Association Act; the property-and-casualty guaranty system does not provide annuity coverage.
  • Montana prohibits any person from using guaranty-association protection in the sale of insurance. Member insurers must also deliver the Commissioner-approved summary document before or at delivery of a covered policy or contract; the document must warn that coverage may be limited or unavailable and should not be relied on when selecting an insurer.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Montana guaranty protection may apply to eligible contractual obligations of an impaired or insolvent life or health member insurer, subject to statutory limits and exclusions.
    FDIC: The federal deposit program covers eligible bank-account balances under a different protection system.
  • What system stands behind it
    State protection: The Montana 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.
    FDIC: Banks in the federal program support a different insurance system for deposits.
  • Coverage-limit basis
    State protection: Montana generally provides up to $250,000 in present-value annuity benefits with respect to one life, subject to the applicable $300,000 aggregate and statutory exclusions.
    FDIC: Bank limits turn on the depositor, ownership category, and insured institution.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Montana guaranty association protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: FDIC coverage attaches to eligible deposits; it does not insure the Montana annuity.

Sources and last verified

Last verified: September 29, 2026