State annuity protection

Ohio Annuity Guaranty Protection: $250,000 Limit Explained

Ohio generally protects up to $250,000 in the present value of covered annuity benefits. The association may assist during rehabilitation, but its mandatory guaranty duties begin after a court liquidates an insolvent member insurer.

Ohio annuity protection at a glance

Annuity benefit limit
$250,000
Present value of annuity benefits, including net cash surrender and withdrawal values
Overall benefit cap
$300,000
Ohio generally caps all covered benefits for one individual in one insurer failure at $300,000, with a separate higher aggregate for major-medical benefits.
Who provides protection
Ohio Life and Health Insurance Guaranty Association
Revised Code Chapter 3956 lets OLHIGA continue, assume, reissue, reinsure or pay obligations once the corresponding impairment or liquidation rule applies.
Insurer requirement
Member insurer
OLHIGA’s FAQ makes Ohio authority decisive: a policy from a company unlicensed in the state does not qualify.

How the $250,000 limit works

Present-value annuity benefits, including net cash surrender and withdrawal values, are limited to $250,000 for one individual at one failed insurer.

All annuities purchased from a single failed insurer share the $250,000 maximum; three contracts are not three limits.

Contracts at another member insurer are measured only if that company also fails, under the facts and residence then in force.

Ohio generally caps all covered benefits for one individual in one insurer failure at $300,000, with a separate higher aggregate for major-medical benefits.

  • Ohio imposes a $250,000 present-value ceiling for an individual participating through a covered governmental retirement plan’s unallocated annuity.
  • For another qualifying unallocated arrangement, Ohio limits the protected contract holder to $5 million across all such contracts.

A $300,000 annuity example

An Ohio resident owns a qualifying $300,000 annuity at one liquidated member insurer and has no other covered benefit there.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

Chapter 3956 limits the illustrated association amount to $250,000.

The figures assume Ohio eligibility, guaranteed contract value and a liquidation that activates mandatory protection.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    A fixed annuity can qualify when it was issued by a member insurer authorized to issue the contract in Ohio and the owner meets the residence rules.

  • Fixed indexed annuity (FIA)

    Generally covered

    An FIA can qualify, but Ohio may remove excess crediting, value still subject to forfeiture and some index gains that have not posted. Contracts with crediting intervals longer than a year receive a special calculation.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    Ohio generally treats a MYGA as a fixed deferred contract, applying the $250,000 ceiling after the statute’s interest restrictions.

  • Variable annuity

    Guaranteed portions may be covered

    The holder’s separate-account investment risk is excluded; an insurer-backed guarantee must be analyzed on its own terms.

  • Registered index-linked annuity (RILA)

    Contract-specific

    RILA protection cannot be decided from the product name because credited guarantees and market-risk components receive different treatment.

  • Unallocated annuity contract

    Limited situations

    Unallocated annuity contracts are covered only in limited circumstances. Qualifying governmental-plan participants have a $250,000 individual limit, while certain other covered contract holders have a separate $5 million limit.

Who may qualify?

  • The owner’s residence is tested at the applicable impairment or insolvency event under Chapter 3956.
  • The owner usually supplies the residence; OLHIGA states that a trust-owned contract is assigned through the trustee’s residence.
  • Limited protection may follow when the failed insurer is Ohio-domiciled and the claimant lacks coverage from another state association.
  • Ohio coordinates its protection with the association in the owner’s state to prevent duplicate recovery.
  • OLHIGA’s FAQ makes Ohio authority decisive: a policy from a company unlicensed in the state does not qualify.

What is not covered?

  • Amounts not guaranteed by the member insurer and risks borne by the contract holder are not covered.
  • Interest above the statutory benchmark and certain uncredited or forfeitable index-linked value can be excluded. When index value is credited less often than annually, Ohio applies a special calculation at impairment or insolvency.
  • A contract issued while the company lacked Ohio authority does not enter OLHIGA protection.
  • Claims based on marketing materials, misrepresentation or other extra-contractual promises are outside the written contract.
  • Punitive, consequential or incidental damages, penalties and attorney’s fees are not guaranty benefits.

What happens after an insurer fails?

  1. 1

    Regulatory trouble begins

    Supervision or financial distress alone does not activate the mandatory guaranty duty.

  2. 2

    Rehabilitation remains discretionary

    Once a court orders rehabilitation or conservation, OLHIGA may assist, while payments or withdrawals can be reduced or suspended.

  3. 3

    Moratoriums may restrict cash access

    Court-approved liens or temporary holds can apply, subject to any hardship procedure established in the receivership.

  4. 4

    Liquidation makes the duty mandatory

    A liquidation order with a finding of insolvency requires OLHIGA to provide one of the remedies authorized by Chapter 3956.

How the guaranty system is financed

Covered obligations are supported through member assessments and the failed insurer’s available estate, not through a bank-deposit program.

Assessment allocation
Member insurers
Assessments are allocated to the account and premium class associated with the insolvent insurer’s business.
Annual assessment cap
Defined by state law
For Ohio life-and-annuity business and for health business, the yearly call cannot exceed 2% of the member’s relevant three-year average in-state premiums.
Premium-tax treatment
State-specific rule
Ohio allows one-fifth of a qualifying assessment to reduce a member insurer’s premium or franchise tax in each of five years, starting after the fiscal biennium of payment.
Rehabilitation-to-liquidation switch
Chapter 3956 uses “may” for an impaired insurer and “shall” after liquidation, making the court order the legal change in OLHIGA’s duty.

What to know before buying

  • Treat the insurer’s financial condition as the first screen; OLHIGA protection is a post-failure backstop and may involve a period without normal access.
  • Ohio bars use of association protection in sales, solicitation or purchase inducement while requiring an approved disclosure at or before policy delivery.

How state protection differs from FDIC insurance

  • What it covers
    State protection: OLHIGA responds to covered obligations of a liquidated member insurer.
    FDIC: FDIC deposit coverage responds when an insured bank fails.
  • What system stands behind it
    State protection: OLHIGA is an industry-funded nonprofit statutory association of member insurers.
    FDIC: For eligible bank balances, the United States backs federal deposit insurance with its full faith and credit.
  • Coverage-limit basis
    State protection: The annuity amount is combined across contracts from one insurer and constrained by a broader individual aggregate.
    FDIC: Deposit insurance applies its own depositor, bank and ownership-category framework.
  • Whether it applies to annuities
    State protection: An eligible annuity can receive Chapter 3956 protection after liquidation.
    FDIC: No annuity becomes FDIC-insured merely because a bank or broker sold it.

Sources and last verified

Last verified: August 26, 2026