State annuity protection

Tennessee Annuity Guaranty Protection: $250,000 Current Limit and $300,000 General Aggregate

Tennessee generally provides up to $250,000 in protection for the present value of covered annuity benefits with respect to one life, subject to a $300,000 general aggregate and statutory eligibility requirements.

Tennessee annuity protection at a glance

Annuity benefit limit
$250,000
Present value of covered annuity benefits, including eligible net cash surrender and withdrawal values. For insurers that became insolvent before July 1, 2009, an older $100,000 annuity limit may apply.
Overall benefit cap
$300,000
Most covered benefits are subject to a $300,000 aggregate with respect to one life, while qualifying health-benefit-plan benefits may be subject to a $500,000 aggregate.
Who provides protection
Tennessee Life and Health Insurance Guaranty Association
The Association may provide assistance while a member insurer is impaired and has broader statutory duties once the insurer becomes insolvent.
Insurer requirement
Member insurer
The issuing insurer must qualify as a Tennessee member insurer, and the policy or contract must fall within a type of coverage protected by the Tennessee Life and Health Insurance Guaranty Association Act.

How the $250,000 limit works

Under current law, Tennessee generally limits covered annuity benefits to $250,000 in present value with respect to one life, including eligible net cash surrender and withdrawal values.

Multiple covered annuity contracts with the same impaired or insolvent member insurer generally share one $250,000 annuity limit with respect to the same life.

Coverage is generally evaluated separately for each impaired or insolvent member insurer using the residency and eligibility rules applicable to that proceeding.

Most covered benefits are subject to a $300,000 aggregate with respect to one life, while qualifying health-benefit-plan benefits may be subject to a $500,000 aggregate.

  • A qualifying structured-settlement payee, or beneficiary of a deceased payee, may receive up to $250,000 in present-value annuity benefits.
  • Qualifying health-benefit-plan benefits may be subject to a $500,000 aggregate with respect to one life; this does not increase the separate annuity-specific limit.

A $300,000 annuity example

Assume a Tennessee resident owns an eligible fixed annuity with a covered present value of $300,000 when the member insurer becomes insolvent under the current coverage schedule.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

In this example, up to $250,000 falls within the statutory guaranty limit. The remaining $50,000 may remain a claim against the failed insurer’s receivership estate, and the covered portion may be funded through a combination of Association resources and estate assets.

This example assumes the current Tennessee limit applies, one covered life is involved, and no other covered benefits affect the aggregate limit.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Tennessee’s applicable annuity limit when the insurer, claimant, and contract satisfy the statutory eligibility requirements.

  • Fixed indexed annuity (FIA)

    Generally covered

    FIAs are generally covered, although certain nonguaranteed, excess, uncredited, or forfeitable index-linked amounts may be excluded. When index-linked value is credited less frequently than annually, Tennessee treats the earlier impairment or insolvency date as the contractual crediting date for determining credited, nonforfeitable value.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    MYGAs are generally treated as fixed deferred annuities and are subject to Tennessee’s applicable annuity limit and statutory interest-rate restrictions.

  • Variable annuity

    Guaranteed portions may be covered

    Only insurer-guaranteed benefits may qualify; 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, only insurer-guaranteed obligations may qualify; portions where the contract owner bears market or index risk are generally excluded.

  • Unallocated annuity contract

    Generally excluded

    Unallocated annuity contracts are generally excluded, except to the extent specific annuity benefits are guaranteed to an individual under the contract or certificate.

Who may qualify?

  • Residency is generally determined on the date of the court order that determines the member insurer to be impaired or insolvent.
  • Tennessee law states the annuity limit with respect to one life, while the Association FAQ uses owner-based examples. Unusual owner and annuitant arrangements may require case-specific review.
  • A nonresident may qualify in limited circumstances when the failed insurer is Tennessee-domiciled and the person is not eligible for guaranty protection in their state of residence.
  • Tennessee’s interstate coordination rules generally look first to the guaranty association in the person’s state of residence and are designed to prevent duplicate coverage.
  • The issuing insurer must qualify as a Tennessee member insurer, and the policy or contract must fall within a type of coverage protected by the Tennessee Life and Health Insurance Guaranty Association Act.

What is not covered?

  • Older insolvencies may be subject to the historical Tennessee annuity limit rather than today’s $250,000 limit.
  • Nonguaranteed benefits, portions where the contract owner bears the investment risk, and certain excess, uncredited, or forfeitable index-linked amounts may be excluded. Special treatment applies when index-linked value is credited less frequently than annually.
  • Claims based on marketing materials, misrepresentations, or side letters, riders, or other documents that did not satisfy applicable filing or approval requirements generally are not covered.
  • The Association generally does not cover extra-contractual claims, penalties, or consequential or incidental damages.
  • Amounts above the applicable guaranty limits are not covered by the Association but may remain claims against the failed insurer’s receivership estate.

What happens after an insurer fails?

  1. The insurer’s insolvency date determines the applicable annuity limit

    For annuity benefits, Tennessee’s historical cutoff is tied to insolvency: insurers that became insolvent before July 1, 2009 are subject to the former $100,000 annuity limit, while insurers becoming insolvent after June 30, 2009 are subject to the $250,000 limit.

  2. Court-ordered rehabilitation or conservation establishes impairment

    When a member insurer is impaired, the Association may guarantee, assume, reissue, reinsure, or financially support covered policies and contracts, subject to statutory conditions and commissioner approval.

  3. A liquidation order with a finding of insolvency triggers broader duties

    Once a member insurer becomes insolvent, the Association has broader statutory duties to continue, assume, reissue, reinsure, or otherwise provide covered benefits and obligations.

  4. Covered obligations and receivership claims are coordinated

    Depending on the circumstances, covered obligations may be continued, assumed, reissued, reinsured, or paid. Amounts above guaranty protection may remain claims against the failed insurer’s receivership estate.

How the guaranty system is financed

The Association is funded through assessments of member insurers. Class A assessments generally fund administrative and legal expenses, while Class B assessments fund obligations related to specific impaired or insolvent member insurers.

Assessment allocation
Member insurers
Member-insurer assessments are allocated among the applicable accounts and subaccounts based on Tennessee premiums for covered policies and contracts.
Annual assessment cap
Defined by state law
Annual assessment cap — 2%. For each applicable account or subaccount, a member insurer generally cannot be assessed more than 2% in a calendar year of its average annual Tennessee premiums on covered policies and contracts during the three calendar years preceding the impairment or insolvency year.
Premium-tax treatment
State-specific rule
Tax offset — up to 10% per year for 10 years, subject to an annual premium-based cap. A qualifying assessment may generally be offset against Tennessee premium, franchise, excise, or income tax liability in each of the 10 calendar years following payment, limited each year to the lesser of 10% of the assessment or 0.10% of the insurer’s Tennessee premiums for that year. The offset right may be transferred to certain affiliated member insurers, and remaining uncredited assessments may be accelerated if the member insurer ceases doing business in Tennessee.
Older Tennessee insolvencies
The current annuity limit is $250,000. For annuity benefits involving an insurer that became insolvent before July 1, 2009, the former $100,000 limit may apply.

What to know before buying

  • The current annuity limit is $250,000, but older insurer insolvencies may remain subject to the former $100,000 limit.
  • Tennessee prohibits using the existence of the Guaranty Association for sales, solicitation, or inducement to purchase covered insurance or annuity products. Member insurers must also deliver the approved guaranty-association summary document with covered policies and contracts as required by law. The notice must warn that coverage may be limited or unavailable and should not be relied on when selecting an insurer.

How state protection differs from FDIC insurance

  • What it covers
    State protection: Tennessee guaranty law determines whether the policy or contract is covered and what statutory limits apply.
    FDIC: Federal deposit law determines whether a deposit is insured and what limits apply.
  • What system stands behind it
    State protection: The Tennessee Life and Health Insurance Guaranty Association is a nonprofit legal entity funded primarily through assessments of member insurers.
    FDIC: Insured banks support the federal deposit-insurance fund.
  • Coverage-limit basis
    State protection: Annuity protection is generally limited with respect to one life for an impaired or insolvent member insurer, subject to the statutory limit applicable to that insolvency.
    FDIC: Deposit limits are organized by depositor, insured bank and ownership category.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Tennessee guaranty association protection, subject to statutory limits and exclusions.
    FDIC: Annuities are not FDIC-insured deposits.

Sources and last verified

Last verified: October 6, 2026