State annuity protection

New York Annuity Guaranty Protection: $500,000 Aggregate and Special Contract Rules

New York generally provides up to $500,000 in aggregate protection with respect to one life for covered policies from one impaired or insolvent insurer, subject to special rules for group health coverage and certain unallocated group annuities and funding agreements.

New York annuity protection at a glance

Annuity benefit limit
$500,000
Up to $500,000 in aggregate covered benefits with respect to one life, including eligible annuity benefits and cash values, subject to New York’s statutory exceptions.
Overall benefit cap
$500,000
The general limit is $500,000 with respect to one life across covered policies from one impaired or insolvent insurer. It does not combine separate insurer failures into one limit, and statutory exceptions apply.
Who provides protection
The Life and Health Insurance Company Guaranty Corporation of New York
The Life and Health Insurance Company Guaranty Corporation of New York is a statutory not-for-profit corporation whose member insurers must participate as a condition of doing covered insurance business in New York.
Insurer requirement
Member insurer
The issuing insurer generally must have been licensed to transact the applicable business in New York either when the policy or contract was issued or on the date of the relevant liquidation or rehabilitation order.

How the $500,000 limit works

For ordinary individual coverage, the $500,000 amount is an aggregate with respect to one life rather than a separate $500,000 annuity bucket. Certain group health coverage and qualifying unallocated group annuities or funding agreements follow different rules.

Multiple covered annuities and other ordinary covered policies associated with the same life at one impaired or insolvent insurer generally share the $500,000 aggregate. A jointly owned deferred annuity generally has one coverage level, while qualifying income annuities with multiple annuitants may receive a separate coverage level for each annuitant.

Coverage limits are generally applied separately to each impaired or insolvent member insurer, subject to New York’s coordination rules.

The general limit is $500,000 with respect to one life across covered policies from one impaired or insolvent insurer. It does not combine separate insurer failures into one limit, and statutory exceptions apply.

  • A qualifying structured-settlement payee or beneficiary is covered under Article 77’s residency and coordination rules. The ordinary $500,000 aggregate applies subject to the statutory coverage unit and other Article 77 provisions.
  • A jointly owned deferred annuity generally has one $500,000 coverage level even with multiple owners or annuitants. An income annuity with multiple annuitants can have a separate coverage level based on each annuitant’s life; multiple owners alone do not create additional limits.
  • The ordinary $500,000 limit applies with respect to one life or, when benefits under a covered policy are not allocated to a specific life, to one covered policy.
  • Certain unallocated group annuities and employee-benefit-plan funding agreements use a separate $1 million per-contract limit, subject to §7703 scope requirements.

A $550,000 annuity example

Assume a New York resident owns an eligible fixed annuity with a present value of $550,000 at an insolvent member insurer and has no other covered benefits with that insurer.

Annuity value

$550,000

Potential protection

$500,000

Possible receivership claim

$50,000

In this example, up to $500,000 may qualify for Guaranty Corporation protection, while the remaining $50,000 may remain a claim against the insurer’s receivership estate.

This example assumes one owner and one life. Jointly owned deferred annuities, income annuities with multiple annuitants, structured settlements, and unallocated group annuities follow separate statutory or Guaranty Corporation guidance.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered, with eligible benefits subject to New York’s $500,000 aggregate with respect to one life and other statutory requirements.

  • Fixed indexed annuity (FIA)

    Generally covered

    FIAs are generally covered to the extent of qualifying insurer-guaranteed obligations. Portions where the contract holder bears the investment or index risk are generally excluded.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGA guarantees may qualify for protection, but if the guaranteed interest rate was clearly excessive when the contract was issued, the Superintendent may ask the court to limit the Guaranty Corporation’s interest obligation to a rate the court finds appropriate and reasonable.

  • Variable annuity

    Guaranteed portions may be covered

    Variable-annuity protection is limited to qualifying guarantees made by the insurer. Gains and losses in a separate account remain outside Article 77 when the contract holder bears that investment risk.

  • Registered index-linked annuity (RILA)

    Contract-specific

    A RILA can qualify only for enforceable obligations guaranteed by the insurer. Market exposure or separate-account results assigned to the contract holder do not become covered benefits.

  • Unallocated annuity contract

    Limited situations

    Certain covered group annuity contracts that do not guarantee benefits to specifically identified individuals, and certain funding agreements issued to fund employee benefit plans, are subject to a separate $1 million per-contract limit. Coverage also depends on the plan sponsor’s principal place of business or other scope requirements in §7703.

Who may qualify?

  • For Article 77 purposes, a resident includes a person to whom a contractual obligation is owed who either resides in New York on the date of the liquidation or rehabilitation order or resided in New York when the covered policy was issued.
  • The $500,000 ordinary limit is stated with respect to one life, but ownership also matters in the Guaranty Corporation’s annuity guidance. Spouses who own separate annuities may each receive a separate limit; a jointly owned annuity is generally treated as having one owner for coverage purposes.
  • A person who lived in New York when the covered policy or annuity was issued can remain within New York’s statutory resident definition after moving, subject to coordination with any guaranty association in the current state of residence.
  • For foreign or alien insurers, New York coordinates its protection with the guaranty corporation or association in the insurer’s state of domicile or entry so that combined protection does not exceed the applicable New York statutory limit.

What is not covered?

  • Portions of a policy, contract, or agreement that are not guaranteed by the insurer, or where the policyholder or contract holder bears the investment or other risk, are generally excluded.
  • Self-insured employer benefit arrangements are not covered by the New York Guaranty Corporation.
  • Policies, contracts, or agreements issued outside the United States are excluded to the extent they cover persons who are not U.S. citizens or permanent residents.
  • Policies, contracts, or agreements payable other than in U.S. dollars are excluded.
  • If a guaranteed interest rate is found to have been clearly excessive when the contract was issued, a court may limit the Guaranty Corporation’s interest obligation to an appropriate and reasonable rate.
  • Reinsurance obligations are excluded unless assumption certificates were issued.
  • A person or firm that directly or indirectly owned or controlled 10% or more of the impaired or insolvent insurer at issuance, renewal, or within 90 days before the impairment or insolvency determination is excluded, subject to the statute’s employee-certificate exception.

What happens when an insurer becomes impaired or insolvent?

  1. 1

    Rehabilitation, conservation, or liquidation

    A member insurer may be placed under an order of rehabilitation, conservation, or liquidation. Article 77 applies to covered obligations of qualifying impaired or insolvent member insurers under those proceedings.

  2. 2

    Residency and interstate coverage are determined

    The Guaranty Corporation applies New York’s resident and nonresident rules and coordinates with other state guaranty associations when another jurisdiction may also have responsibility.

  3. 3

    Coverage limits are applied

    For ordinary covered policies, the Guaranty Corporation applies the $500,000 aggregate with respect to one life. Statutory exceptions apply to group health coverage and certain unallocated group annuities or funding agreements.

  4. 4

    Amounts above guaranty protection remain in receivership

    Amounts above the applicable Guaranty Corporation limit may remain claims against the impaired or insolvent insurer’s estate, with additional recovery depending on available receivership assets.

How the guaranty system is financed

The Guaranty Corporation is funded primarily through assessments of member insurers when funds are needed to continue covered policies and meet eligible claims.

Assessment allocation
Member insurers
Class B and Class C assessments are allocated among member insurers based generally on their share of covered New York premiums.
Annual assessment cap
2%
Annual assessment cap — 2%. Total assessments against a member insurer for each account generally cannot exceed 2% of its covered New York premiums received during the calendar year preceding the assessment.
Premium-tax treatment
Insurer tax credit — not a policyholder benefit
New York generally provides tax-credit certificates equal to 80% of qualifying net Class A assessments and 80% of qualifying net Class B and Class C assessments. Class B and Class C credits are subject to a $150 million statewide annual cap and are generally claimed in three equal installments over three taxable years. These credits are for assessed member insurers, not policyholders.
Insurer assessment tax credits
New York generally provides tax-credit certificates equal to 80% of qualifying net Class A assessments and 80% of qualifying net Class B and Class C assessments. Class B and Class C credits are subject to a $150 million statewide annual cap and are generally claimed in three equal installments over three taxable years. These credits belong to assessed member insurers and do not increase policyholder guaranty coverage.

What to know before buying

  • When the same impaired or insolvent insurer owes multiple ordinary covered benefits with respect to one life, those benefits may share New York’s $500,000 aggregate.
  • New York Insurance Law §7718 prohibits using the existence of the Guaranty Corporation for sales, solicitation, or inducement to purchase covered insurance, subject to the statute’s limited exceptions for Corporation-prepared information.

How state protection differs from FDIC insurance

  • What it covers
    State protection: New York guaranty protection may apply to eligible insurer-guaranteed annuity obligations and other covered policy benefits.
    FDIC: Federal deposit insurance covers qualifying deposit accounts rather than insurance-policy obligations.
  • What system stands behind it
    State protection: The Life and Health Insurance Company Guaranty Corporation of New York is a statutory not-for-profit funded through assessments of member insurers and supervised by the Superintendent.
    FDIC: The federal deposit-insurance program backs FDIC-insured deposits with the full faith and credit of the United States government.
  • Coverage-limit basis
    State protection: New York generally applies a $500,000 aggregate with respect to one life for ordinary covered policies at one impaired or insolvent insurer. Certain group health coverage and unallocated group annuities or funding agreements follow different limits.
    FDIC: Deposit limits are calculated by depositor ownership category at each bank.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive New York guaranty protection, but annuity contracts are not bank deposits and are not insured by the FDIC.
    FDIC: The federal program protects eligible bank deposits, not annuity contracts.

Sources and last verified

Last verified: September 23, 2026