State annuity protection

North Carolina Annuity Guaranty Protection: $300,000 Limit Explained

North Carolina’s ordinary $300,000 figure is both the annuity maximum and the shared ceiling for most benefits on one life, with separate $1 million and $5 million special categories.

North Carolina annuity protection at a glance

Annuity benefit limit
$300,000
Ordinary individual annuity benefits, including cash values, up to $300,000 per life.
Overall benefit cap
$300,000
The standard aggregate is $300,000 per life; it does not absorb the statute’s separately stated structured-settlement and qualifying unallocated amounts.
Who provides protection
North Carolina Life & Health Insurance Guaranty Association
The North Carolina Life & Health Insurance Guaranty Association responds to covered obligations of member insurers under chapter 58, article 62.
Insurer requirement
Member insurer
Article 62 must include the failed issuing company among the insurers obligated to belong to the association.

How the $300,000 limit works

Ordinary annuity benefits, including cash values, can reach $300,000, but life and other non-health-plan claims do not stack above that same per-life aggregate.

All ordinary annuities for one individual at one failed company share $300,000.

A second member carrier ordinarily opens a separate $300,000 calculation.

The standard aggregate is $300,000 per life; it does not absorb the statute’s separately stated structured-settlement and qualifying unallocated amounts.

  • Participants in qualifying governmental retirement plans may receive up to $300,000 each under covered unallocated annuity contracts.
  • North Carolina applies a $1 million amount to each qualifying structured-settlement payee.
  • Certain other qualifying unallocated-annuity contract owners may receive up to $5 million per contract owner.

A $350,000 annuity example

A Raleigh owner presents $350,000 from one ordinary fixed annuity after its issuing member company fails; no settlement-payee or plan benefit is involved.

Annuity value

$350,000

Potential protection

$300,000

Possible receivership claim

$50,000

The ordinary $300,000 category controls; neither special provision changes a retail fixed-annuity calculation.

The illustration distinguishes statutory categories and must not be read as making special limits available to an ordinary retail annuity.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to North Carolina’s $300,000 per-life limit, subject to statutory exclusions.

  • Fixed indexed annuity (FIA)

    Generally covered

    North Carolina may exclude FIA index value that is still uncredited or forfeitable. When a contract credits less often than once a year, the statute uses a special impairment-date calculation.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    A MYGA’s excess crediting is removed under North Carolina’s Moody’s-based formula.

  • Variable annuity

    Guaranteed portions may be covered

    Variable separate-account risk is excluded.

  • Registered index-linked annuity (RILA)

    Contract-specific

    For a RILA, North Carolina can consider an enforceable insurer promise, while market or index exposure assigned to the owner stays outside association protection.

  • Unallocated annuity contract

    Limited situations

    North Carolina provides narrow unallocated-contract routes: as much as $300,000 for each eligible government-plan participant and $5 million for certain other contract owners.

Who may qualify?

  • Residence is generally tested on the liquidation-order date under the association’s guidance.
  • The owner controls an ordinary annuity claim; a resident structured-settlement payee and a qualifying plan holder use their specific clauses.
  • A nonresident usually relies on the association in the state of residence.
  • North Carolina can become relevant for its domiciled insurer if the residence association cannot cover the contract.
  • Article 62 must include the failed issuing company among the insurers obligated to belong to the association.

What is not covered?

  • Nonguaranteed benefits and owner-borne investment risk are excluded.
  • Interest over the statutory reference formula does not qualify.
  • Index value that has not vested may fall outside coverage; contracts with longer crediting periods receive the statute’s special calculation.
  • A structured-settlement payee who transferred payment rights through a factoring transaction is outside the special protection.

What happens after an insurer fails?

  1. 1

    Court controls the company

    Payments or withdrawals may be reduced while the receiver sorts the troubled insurer’s affairs.

  2. 2

    Residence and category fixed

    The liquidation date and contract form determine the responsible association and applicable North Carolina clause.

  3. 3

    Ordinary or special amount applied

    Most annuities use $300,000; qualifying payees and plan arrangements use their separate provisions.

  4. 4

    Receiver considers excess

    Any amount beyond association responsibility can be filed with the insurer’s receiver; additional payment depends on assets remaining in the estate.

How the guaranty system is financed

North Carolina member insurers fund association obligations through assessments after covered failures.

Assessment allocation
Member insurers
The act allocates assessments through its accounts and member premium base.
Annual assessment cap
Defined by state law
For each covered life-and-annuity subaccount and the health account, North Carolina’s annual call cannot exceed 2% of the applicable three-year average in-state premium base.
Premium-tax treatment
State-specific rule
A member insurer may claim a premium-tax credit equal to 20% of a qualifying assessment in each of the five taxable years following the assessment year, limited by its premium-tax liability.
Article 62 assessment funding
The special participant, structured-settlement, and contract-owner clauses protect defined categories; they do not raise every owner’s ordinary annuity maximum.

What to know before buying

  • Count existing life and other covered benefits at the carrier because they can consume part of the ordinary annuity’s $300,000 ceiling.
  • North Carolina prohibits using association protection in advertising or to induce a purchase and provides a prescribed warning template.

How state protection differs from FDIC insurance

  • What it covers
    State protection: North Carolina can protect ordinary annuities, qualifying settlement payees, and specified unallocated arrangements.
    FDIC: FDIC insurance protects eligible deposits and has no insurance-contract categories.
  • What system stands behind it
    State protection: The North Carolina Life & Health Insurance Guaranty Association administers article 62 for member failures.
    FDIC: Banks carrying FDIC insurance stand within the federal deposit system.
  • Coverage-limit basis
    State protection: North Carolina uses $300,000 per life ordinarily, with separate $300,000 participant, $1 million payee, and $5 million contract-owner categories.
    FDIC: Federal deposit limits turn on the depositor, ownership capacity, and insured bank.
  • Whether it applies to annuities
    State protection: A qualifying North Carolina annuity may receive association protection; it is never an FDIC-insured deposit.
    FDIC: FDIC coverage reaches an eligible bank account instead of an annuity.

Sources and last verified

Last verified: August 25, 2026