State annuity protection

Virginia Annuity Guaranty Protection: $250,000 Annuity Limit and $350,000 Aggregate

Virginia generally provides up to $250,000 in protection for the present value of covered annuity benefits with respect to one life. Most covered benefit categories are also subject to a $350,000 aggregate, while qualifying health-benefit-plan benefits may be subject to a $500,000 aggregate.

Virginia annuity protection at a glance

Annuity benefit limit
$250,000
Present value of covered annuity benefits, including eligible net cash surrender and withdrawal values
Overall benefit cap
$350,000
Most covered benefits are subject to a $350,000 aggregate with respect to one life. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate.
Who provides protection
Virginia Life, Accident and Sickness Insurance Guaranty Association
The Association may provide assistance when a member insurer is impaired and has broader statutory duties once a court places the insurer into liquidation with a finding of insolvency.
Insurer requirement
Member insurer
The issuing insurer must qualify as a Virginia member insurer, and the policy or contract must be within a type of coverage protected by Chapter 17.

How the $250,000 limit works

Virginia generally limits covered annuity benefits to $250,000 in present value with respect to one life.

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 insurer.

Most covered benefits are subject to a $350,000 aggregate with respect to one life. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate.

  • An eligible participant in a qualifying Section 401, 403(b), or 457 benefit plan who selected an investment option that includes a covered unallocated annuity may receive up to $250,000 in present-value annuity benefits.
  • Certain other qualifying unallocated-annuity contracts owned directly or in trust by a benefit plan may receive up to $5 million in aggregate protection with respect to one qualifying plan sponsor, subject to Virginia’s principal-place-of-business rules.
  • A qualifying structured-settlement payee, or beneficiary of a deceased payee, may receive up to $250,000 in present-value annuity benefits.

A $300,000 annuity example

Assume a Virginia resident owns an eligible fixed annuity with a covered present value of $300,000 when the member insurer becomes insolvent, with no other covered benefits affecting the aggregate limit.

Annuity value

$300,000

Potential protection

$250,000

Possible receivership claim

$50,000

In this example, up to $250,000 falls within the statutory annuity limit. The remaining $50,000 may remain a claim against the receivership estate, while actual funding of the covered amount may also reflect assets attributable to covered policies and the Association’s subrogation rights.

This example assumes one covered life, one impaired or insolvent member insurer, and no other covered benefits that would affect the $350,000 aggregate.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities are generally covered up to Virginia’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, Virginia 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 Virginia’s $250,000 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

    Limited situations

    Certain unallocated annuity contracts receive limited coverage. Eligible participants in qualifying Section 401, 403(b), or 457 plans may receive up to $250,000 each, while certain other qualifying plan sponsors may receive up to $5 million in aggregate protection. Virginia’s statutory definition of annuity contracts includes guaranteed investment contracts and deposit administration contracts, but eligibility still depends on the unallocated-annuity coverage rules and exclusions.

Who may qualify?

  • Residency is generally determined when the Commission first considers the member insurer impaired or when a court enters an order of liquidation with a finding of insolvency, whichever applicable status occurs first.
  • Virginia law states the annuity limit with respect to one life, while the Association FAQ describes ordinary annuity protection on a per-owner basis. The statute controls, and unusual owner/annuitant arrangements may require case-specific review.
  • A nonresident owner, certificate holder, or enrollee may qualify in limited circumstances when the failed insurer is Virginia-domiciled, the person’s state of residence has a similar guaranty association, and the person is not eligible there because the insurer lacked the required license or authority. Structured settlements and unallocated annuities have separate residency rules.
  • Virginia’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 Virginia member insurer, and the policy or contract must be within a type of coverage protected by Chapter 17.

What is not covered?

  • Amounts above the applicable annuity-specific, aggregate, or special-category limits are not covered by the Association but may remain claims against the failed insurer’s receivership estate.
  • Nonguaranteed benefits, portions where the contract owner bears the investment risk, interest or crediting above Virginia’s statutory limits, and certain 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, including bad-faith claims, punitive damages, or attorney fees and costs, as well as penalties or consequential or incidental damages.
  • Certain book-value accounting guarantees, unallocated annuity contracts connected with PBGC-protected plans, and portions of unallocated annuity contracts not issued to or in connection with a specific employee, union, or association benefit plan are excluded.
  • Charitable gift annuities are not covered by the Virginia Life, Accident and Sickness Insurance Guaranty Association.
  • A policy or contract issued in Virginia while the member insurer lacked the required authority because its license was suspended, revoked, not renewed, or voluntarily withdrawn is excluded.

What happens after an insurer fails?

  1. The member insurer becomes impaired or insolvent

    The Commission’s determination that a member insurer is potentially unable to fulfill its contractual obligations establishes impairment, while insolvency requires a court order of liquidation with a finding of insolvency. The applicable status date determines residency.

  2. Residency and eligibility are determined

    The Association reviews insurer membership, claimant eligibility, residency, contract guarantees, statutory exclusions, and any applicable interstate coordination rules.

  3. The annuity-specific and aggregate limits are applied

    Virginia first applies the applicable benefit-specific limit, including the $250,000 annuity limit, and then applies the $350,000 general aggregate with respect to one life. Qualifying health-benefit-plan benefits may instead be subject to a $500,000 aggregate.

  4. Covered obligations are continued or paid

    Depending on the circumstances, covered contracts 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 primarily through assessments of member insurers and recoveries. Virginia also maintains a separate safety fund that can be used for covered claims when the statutory assessment limit is reached.

Assessment allocation
Member insurers
Class B assessments are allocated among member insurers based on Virginia premiums for covered business during the three most recent calendar years for which information is available preceding the year of impairment or insolvency.
Annual assessment cap
Defined by state law
For each applicable subaccount of the life insurance and annuity account and for the accident and sickness account, a member insurer generally cannot be assessed more than 2% in a calendar year of its average annual Virginia premiums on covered policies and contracts during the three calendar years preceding the impairment or insolvency year.
Premium-tax treatment
State-specific rule
A qualifying non-Class-A assessment is represented by a certificate of contribution that is amortized at 10% per year during the 10 calendar years following payment, and the annual amortized amount may generally offset Virginia premium-tax liability.
Virginia-specific funding details
The statutory limits describe the maximum benefits for which the Association may be obligated before coordination with assets attributable to covered policies and the Association’s subrogation or assignment rights. Virginia’s separate safety fund may be used for covered claims when the §38.2-1705 assessment limit is reached; safety-fund advances to an Association account generally are loans repaid through later member assessments, subject to statutory exceptions and Commission approval. The premium-tax offset is reduced by any federal income-tax benefit attributable to deducting the assessment.

What to know before buying

  • Different covered benefit categories with respect to the same life may be subject to Virginia’s $350,000 general aggregate.
  • Virginia prohibits using the existence of the Guaranty Association for sales, solicitation, or inducement to purchase covered insurance or annuity products. Member insurers must also provide the required guaranty-association notice at the time of policy or contract delivery as prescribed by law.

How state protection differs from FDIC insurance

  • What it covers
    State protection: The Virginia Life, Accident and Sickness Insurance Guaranty Association provides statutory protection for covered obligations of impaired or insolvent member insurers.
    FDIC: Federal law governs insured bank deposits.
  • What system stands behind it
    State protection: The Virginia Association is a nonprofit legal entity funded primarily through assessments of member insurers and supervised by the State Corporation Commission.
    FDIC: FDIC deposit insurance is funded through assessments on insured depository institutions and is backed by the full faith and credit of the U.S. government.
  • Coverage-limit basis
    State protection: Virginia generally limits annuity benefits to $250,000 in present value with respect to one life, subject to a $350,000 general aggregate and a separate $500,000 aggregate for qualifying health-benefit-plan benefits.
    FDIC: Depositor, bank, and ownership category determine federal deposit-insurance coverage.
  • Whether it applies to annuities
    State protection: Eligible annuity benefits may receive Virginia 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