State annuity protection

New Mexico Annuity Guaranty Protection: $250,000 Current Limit and 2025 Boundary

New Mexico’s compiled 2025 Act states a $250,000 present-value ceiling for covered annuity benefits, including qualifying net cash available for surrender or withdrawal.

New Mexico annuity protection at a glance

Annuity benefit limit
$250,000
The New Mexico annuity calculation converts the covered promise to present value and includes eligible net surrender and withdrawal amounts.
Overall benefit cap
$300,000
New Mexico generally places the benefits listed in § 59A-42-4(F)(2) through (4) under a $300,000 aggregate for one life; health-benefit plans use their statutory exception.
Who provides protection
New Mexico Life Insurance Guaranty Association
The New Mexico Life Insurance Guaranty Association is the Act’s statutory body for covered member-company failures, with insurer assessments financing its protection duties.
Insurer requirement
Member insurer
The failed issuer must meet New Mexico’s current member-insurer definition, which now includes qualifying health maintenance organizations.

How the $250,000 limit works

Under § 59A-42-4(F)(2)(c), New Mexico limits covered annuity present value to $250,000 before applying any broader aggregate.

All covered annuity value concerning one life at the same failed New Mexico member company draws on that $250,000 amount.

Another failed member company begins a separate New Mexico calculation when this association is responsible for the claimant.

New Mexico generally places the benefits listed in § 59A-42-4(F)(2) through (4) under a $300,000 aggregate for one life; health-benefit plans use their statutory exception.

  • A qualifying governmental retirement-plan participant has a separate $250,000 present-value annuity ceiling.
  • Present-value annuity benefits for an eligible structured-settlement payee stop at $250,000; rights transferred in a factoring transaction are excluded.
  • Specified remaining covered unallocated annuity contracts have a $5 million limit for each eligible contract owner or plan sponsor.

A $300,000 annuity example

Assume a New Mexico resident owns a $300,000 covered MYGA under the current act.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

The illustration assigns $250,000 to possible association protection; the $50,000 excess can enter receivership as a policyholder-level claim.

The example isolates the current annuity limit and does not estimate any receivership distribution.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    A qualifying fixed annuity uses New Mexico’s $250,000 present-value amount after the Act’s eligibility rules and exclusions are applied.

  • Fixed indexed annuity (FIA)

    Generally covered

    For a fixed indexed annuity, insurer-guaranteed obligations may qualify. New Mexico normally excludes uncredited or forfeitable index value, but treats the impairment or insolvency date as a scheduled crediting date when the contract credits less often than annually.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    New Mexico evaluates a MYGA within its fixed-annuity rules. Interest over the Act’s statutory benchmark can be removed from the protected obligation.

  • Variable annuity

    Guaranteed portions may be covered

    A variable annuity’s owner-borne separate-account result is outside protection; only an enforceable guarantee owed by the insurer can qualify.

  • Registered index-linked annuity (RILA)

    Contract-specific

    For a New Mexico RILA, owner-borne market or index exposure is generally excluded. The less-than-annual crediting rule can still affect qualifying index-linked value.

  • Unallocated annuity contract

    Limited situations

    Covered unallocated arrangements can provide $250,000 for each eligible governmental-plan participant or as much as $5 million for an eligible contract owner or plan sponsor.

Who may qualify?

  • The applicable date is the court order that determines impairment or insolvency; New Mexico evaluates residence then.
  • The current statute measures the annuity amount with respect to one person’s life; unusual owner and annuitant arrangements require that statutory unit to be applied to their facts.
  • A nonresident can qualify only when the failed company is New Mexico-domiciled, the residence state has a similar association, and that person is ineligible there because the insurer or HMO lacked the licensing required by that state’s guaranty law.
  • New Mexico domicile therefore matters for the narrow nonresident fallback, not as a substitute for the residence-state eligibility analysis.
  • The failed issuer must meet New Mexico’s current member-insurer definition, which now includes qualifying health maintenance organizations.

What is not covered?

  • New Mexico omits nonguaranteed portions and contract value for which the policy or contract holder bears investment risk.
  • Interest, crediting rates, or comparable factors above the Act’s prescribed benchmark are not part of the covered obligation.
  • Claims resting on marketing material, unauthorized side letters or riders, benefit misrepresentations, or extra-contractual theories are excluded.
  • Penalties and consequential or incidental damages are also outside New Mexico guaranty protection.

What happens after an insurer fails?

  1. 1

    Insurer enters court proceedings

    A court order identifies the member company as impaired or insolvent and fixes the New Mexico residence date.

  2. 2

    Eligibility and residency are determined

    The association applies the claimant, insurer-membership, domicile, and interstate-coordination rules.

  3. 3

    Covered benefits are calculated

    Guaranteed obligations are separated from exclusions, then the annuity-specific and aggregate limits are applied.

  4. 4

    Excess value may remain a receivership claim

    A valid amount beyond guaranty protection can be submitted against the failed insurer’s estate, with recovery depending on that proceeding.

How the guaranty system is financed

Assessments paid by New Mexico member insurers supply the association’s principal funding for covered obligations.

Assessment allocation
Member insurers
Section 59A-42-8 assigns assessments among the health account and the life-and-annuity subaccounts using the applicable covered New Mexico premiums.
Annual assessment cap
Defined by state law
For a life-and-annuity subaccount or the health account, New Mexico limits a member’s calendar-year assessment to 2% of its mean covered New Mexico premium volume across the three years before the impairment or insolvency year.
Premium-tax treatment
State-specific rule
No member-insurer premium-tax offset is identified under the current New Mexico Act; the NAIC guaranty-fund chart lists New Mexico’s premium-tax offset as “No.”
Older New Mexico insolvencies
The 2024 amendment 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.

What to know before buying

  • The current Act and consumer notice state the $250,000 annuity amount; a pre-2025 failure must be checked against the amendment’s precise applicability rule.
  • A New Mexico member insurer, agent, or affiliate may not invoke association existence in marketing, solicitation, or purchase inducement for covered insurance or HMO coverage.

How state protection differs from FDIC insurance

  • What it covers
    State protection: New Mexico guaranty protection can reach the covered present value of an eligible annuity promise.
    FDIC: Federal deposit insurance addresses qualifying money placed with a bank.
  • What system stands behind it
    State protection: The New Mexico Life Insurance Guaranty Association administers the state-law response to a covered insurer failure.
    FDIC: A bank in the federal program participates in a separate deposit-protection system.
  • Coverage-limit basis
    State protection: New Mexico uses $250,000 for covered annuity present value concerning one life, with an additional aggregate rule.
    FDIC: Federal aggregation depends on the bank, depositor, and ownership category.
  • Whether it applies to annuities
    State protection: An eligible New Mexico annuity can receive state guaranty protection but is not an FDIC-insured deposit.
    FDIC: Eligible bank deposits receive FDIC protection; a New Mexico annuity does not.

Sources and last verified

Last verified: September 17, 2026