State annuity protection

New Mexico Annuity Guaranty Protection: $250,000 Limit and 2025 HMO Update

New Mexico generally provides up to $250,000 in protection for the present value of covered annuity benefits with respect to one person’s life, including eligible net cash surrender and withdrawal values, subject to statutory eligibility requirements and exclusions.

New Mexico annuity protection at a glance

Annuity benefit limit
$250,000
The $250,000 limit applies to the present value of covered annuity benefits, including eligible net cash surrender and net cash withdrawal values.
Overall benefit cap
$300,000
New Mexico generally caps benefits at $300,000 in the aggregate with respect to one person’s life across the ordinary per-life, governmental-plan-participant, and structured-settlement categories. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate. The $300,000 aggregate does not increase New Mexico’s separate $250,000 ordinary annuity limit.
Who provides protection
New Mexico Life Insurance Guaranty Association
The New Mexico Life Insurance Guaranty Association is the legal entity organized under the Act, supervised by the Superintendent of Insurance and funded primarily through assessments of member insurers. It may act for an impaired member insurer and has specified duties for an insolvent member insurer.
Insurer requirement
Member insurer
The issuing insurer or qualifying health maintenance organization must meet New Mexico’s current member-insurer definition and the policy or contract must otherwise be covered by the Act. Qualifying health maintenance organizations entered this framework effective January 1, 2025.

How the $250,000 limit works

Under § 59A-42-4(F)(2)(c), New Mexico limits covered annuity benefits to $250,000 in present value with respect to one person’s life, regardless of the number of policies or contracts, before applying the broader aggregate.

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

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

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

  • For a qualifying governmental retirement plan established under IRC sections 401, 403(b), or 457 and covered by an unallocated annuity contract, benefits attributable to each participant or deceased participant’s beneficiaries are limited to $250,000 in aggregate present-value annuity benefits, subject to the applicable $300,000 aggregate.
  • 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. Rights acquired through a structured-settlement factoring transaction are excluded.
  • 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 New Mexico’s plan-sponsor and principal-place-of-business rules.

A $300,000 annuity example

Assume a New Mexico resident owns an eligible MYGA with a covered present value of $300,000 at one impaired or insolvent 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 illustration shows only the statutory guaranty limit 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 New Mexico’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, New Mexico 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 New Mexico’s $250,000 present-value annuity limit and statutory interest-rate restrictions based on Moody’s Corporate Bond Yield Average.

  • 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. The less-than-annual crediting rule applies where the contract’s covered value is determined by an index or other external reference.

  • Unallocated annuity contract

    Limited situations

    Unallocated annuity contracts are covered only in specified circumstances. Qualifying governmental plans established under IRC sections 401, 403(b), or 457 may provide up to $250,000 for each eligible participant, while certain other qualifying contract owners or plan sponsors may receive up to $5 million in aggregate benefits regardless of the number of contracts.

Who may qualify?

  • Residency is determined on the date of entry of a court order determining the member insurer to be impaired or insolvent.
  • The statute states the ordinary annuity limit with respect to one person’s life, while the Association FAQ illustrates annuity coverage as $250,000 per owner per member company. The statutory per-life formulation is the primary rule; unusual owner-and-annuitant or joint-ownership structures may require case-specific review.
  • A nonresident may qualify in limited circumstances when the issuing member insurer is New Mexico-domiciled, the person’s state of residence has a similar guaranty association, and the person is not eligible for coverage there because the insurer or health maintenance organization lacked the required license or authority under that state’s guaranty-association law.
  • New Mexico’s interstate-coordination rules are designed to provide protection through only one state guaranty association and prevent duplicate coverage for the same obligation.
  • The issuing insurer or qualifying health maintenance organization must meet New Mexico’s current member-insurer definition and the policy or contract must otherwise be covered by the Act. Qualifying health maintenance organizations entered this framework effective January 1, 2025.

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 holder bears the investment risk, are generally excluded from guaranty protection.
  • Interest, crediting rates, or similar factors above New Mexico’s statutory limits based on Moody’s Corporate Bond Yield Average may be excluded from guaranty protection.
  • Certain uncredited or forfeitable index-linked amounts may be excluded. If value is credited less frequently than annually, New Mexico applies the deemed-crediting-date rule as of the earlier impairment or insolvency date.
  • Claims based on marketing materials, unauthorized side letters or riders, misrepresentations of policy or contract benefits, extra-contractual claims, penalties, and consequential or incidental damages are generally excluded.
  • Reinsurance obligations are generally excluded unless assumption certificates have been issued.
  • Self-funded or uninsured employer, association, and similar benefit plans are generally excluded.
  • Dividends, experience-rating credits, voting rights, fees, and allowances connected with servicing or administering a policy or contract are generally excluded.
  • Policies or contracts issued in New Mexico while the insurer lacked authority to issue them are excluded.
  • PBGC-protected unallocated annuity plans, unallocated arrangements outside qualifying benefit-plan or government-lottery structures, and specified book-value accounting guarantees are excluded.
  • Benefits under Medicare Parts C or D or Medicaid are excluded.
  • Rights acquired through a structured-settlement factoring transaction are excluded, even though a qualifying structured-settlement payee or beneficiary may receive up to $250,000.

What happens after an insurer fails?

  1. Rehabilitation, conservation, or liquidation proceedings begin

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

  2. Claimant, insurer, and contract eligibility are determined

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

  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 the health account and the life-and-annuity subaccounts and among member insurers based generally on covered New Mexico premiums during the three most recent 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 life-and-annuity subaccount and the health account, total annual assessments generally cannot exceed 2% of the member insurer’s average annual New Mexico 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 — current New Mexico guaranty-association law does not provide a member-insurer premium-tax offset. The NAIC guaranty-fund law chart likewise lists New Mexico’s premium-tax offset as “No”; its pre-amendment HMO entry is not used for current HMO coverage.
2025 amendment boundary and technical rules
Laws 2024, Chapter 36 took effect January 1, 2025 and does not apply to a member insurer that was insolvent or unable to fulfill contractual obligations before that date. The amendment primarily added HMO-related coverage and other changes; New Mexico’s current annuity dollar limits already existed under prior law. New Mexico defines the owner as the person identified as legal owner or vested with legal title through a valid, properly recorded assignment, not a person with only a beneficial interest. For a covered unallocated annuity tied to a benefit plan, eligibility generally follows the plan sponsor’s principal place of business, including the statutory more-than-50%-of-participants rule. An annuity benefit specifically guaranteed to an individual is not treated as unallocated to that extent. Statutory benefit limits are measured before subrogation or assignment rights or covered-policy assets are taken into account. Effective January 1, 2025, benefits provided by a long-term-care rider to an annuity are treated as the same type of benefit as the base annuity.

What to know before buying

  • The current Act and consumer notice state the $250,000 annuity amount. For proceedings involving an insurer already insolvent or unable to fulfill contractual obligations before January 1, 2025, determine which provisions of the 2024 amendment apply; the annuity limit itself did not change on that date.
  • New Mexico prohibits any person, including a member insurer, agent, or affiliate, from using the Association’s existence for sales, solicitation, or inducement. Member insurers must also deliver the Superintendent-approved guaranty-association summary document with covered policies or contracts as required by § 59A-42-17.

How state protection differs from FDIC insurance

  • What it covers
    State protection: New Mexico guaranty protection may apply to eligible insurer-guaranteed contractual annuity benefits, including qualifying present-value and cash-surrender or withdrawal benefits.
    FDIC: FDIC insurance protects qualifying deposits at insured banks.
  • What system stands behind it
    State protection: The New Mexico Life Insurance Guaranty Association administers the state-law guaranty mechanism for covered obligations of impaired or insolvent member insurers; it is supervised by the Superintendent of Insurance and funded through member-insurer assessments.
    FDIC: Federal deposit insurance instead follows qualifying deposit accounts held at participating banks.
  • Coverage-limit basis
    State protection: New Mexico generally provides up to $250,000 in present-value annuity benefits with respect to one person’s life, subject to the applicable $300,000 aggregate and statutory exclusions.
    FDIC: Federal aggregation depends on the bank, depositor, and ownership category.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive New Mexico guaranty association protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: Only a qualifying bank deposit receives federal coverage.

Sources and last verified

Last verified: September 30, 2026