State annuity protection

Wisconsin Annuity Guaranty Protection: $300,000 Limit Explained

Wisconsin uses a multi-line Insurance Security Fund. For a covered annuity, the ordinary $300,000 ceiling applies to the current loss claim measured at liquidation, and the Fund may pay that value instead of preserving the original contract.

Wisconsin annuity protection at a glance

Annuity benefit limit
$300,000
Current covered loss claim under § 645.68 (3), measured as of the liquidation date
Overall benefit cap
$300,000
Wisconsin’s $500,000 exception belongs only to covered property, liability, and qualifying disability coverage that is major medical insurance; it does not raise the annuity ceiling.
Who provides protection
Wisconsin Insurance Security Fund
The Wisconsin Insurance Security Fund operates segregated accounts and can address covered claims only after liquidation, while a separate non-prorated administrative assessment may be made whether or not a liquidation has occurred.
Insurer requirement
Member insurer
The obligation must come from an insurer and line within the Fund’s statutory scope.

How the $300,000 limit works

The Fund’s obligation on one risk, loss, or life is capped at $300,000 regardless of policy count.

Policies treated as one risk, loss, or life at the liquidated insurer share Wisconsin’s $300,000 ordinary ceiling.

A different insurer liquidation produces its own Fund determination and liquidation-date valuation.

Wisconsin’s $500,000 exception belongs only to covered property, liability, and qualifying disability coverage that is major medical insurance; it does not raise the annuity ceiling.

A $350,000 annuity example

Assume a Wisconsin resident has a qualifying $350,000 fixed-annuity loss claim measured under § 645.68 (3) on the liquidation date.

Annuity value

$350,000

Potential protection

$300,000

Possible receivership claim

$50,000

The ordinary Fund ceiling recognizes $300,000; the remaining $50,000 stays with the liquidation claim, and the Fund may satisfy its obligation through a value payment rather than continued terms.

The visual assumes the $350,000 is the qualifying current loss determined at liquidation; it is not an account-value, surrender-value, or premium illustration.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    A covered fixed annuity is valued as a loss claim at liquidation; that value is not the contract’s account value, surrender value, or total premium.

  • Fixed indexed annuity (FIA)

    Generally covered

    An FIA can qualify for insurer-guaranteed value. If its index credit posts on an interval longer than one year, Wisconsin calculates the accrued figure at liquidation and declares that result nonforfeitable.

  • Multi-year guaranteed annuity (MYGA)

    Generally covered

    For a MYGA, the Fund first calculates current value at liquidation and then applies the statutory interest ceiling; the original locked rate need not continue.

  • Variable annuity

    Guaranteed portions may be covered

    Separate-account investment results borne by the owner remain outside the covered claim.

  • Registered index-linked annuity (RILA)

    Contract-specific

    A RILA enters the Fund calculation only for enforceable insurer guarantees; market and index exposure assigned to the owner is excluded.

  • Unallocated annuity contract

    Limited situations

    Wisconsin normally omits an unallocated annuity. The definition, however, removes a benefit directly guaranteed to an individual from that category to the extent of the guarantee.

Who may qualify?

  • Fund coverage is triggered by the final liquidation order and extends to Wisconsin residents on that date.
  • The qualifying policyholder or covered life is determined under chapter 646 for the specific obligation.
  • Chapter 646 supplies no broad former-resident rule; Wisconsin residence at final liquidation remains central.
  • Other-state protection and insurer domicile are coordinated through the receivership rather than assumed from purchase location.
  • The obligation must come from an insurer and line within the Fund’s statutory scope.

What is not covered?

  • Unallocated annuity contracts are generally excluded, subject to the individually guaranteed-benefit distinction in the definition.
  • Owner-carried investment risk, nonguaranteed value, and interest above the statutory benchmark do not become Fund obligations.
  • Marketing statements, misrepresentation theories, claims outside the written contract, punitive awards, penalties, consequential damages, bad-faith damages, and side agreements cannot enlarge the covered claim.
  • Factored structured-settlement payment rights are excluded; an original qualifying structured-settlement payee remains subject to the ordinary Fund limit.
  • The $500,000 property, liability, and qualifying major-medical exception does not apply to annuity claims.
  • Multiple recoveries for the same loss and amounts recoverable from another guaranty mechanism remain subject to chapter 646 coordination.

What happens after an insurer fails?

  1. 1

    Final liquidation triggers coverage

    The liquidation order fixes the claimant’s Wisconsin residence and the date used for the covered-loss calculation.

  2. 2

    The current loss claim is measured

    The Fund calculates the chapter 645.68 (3) loss as of liquidation rather than substituting account value, surrender value, or premium paid.

  3. 3

    Limits and exclusions are applied

    The ordinary $300,000 ceiling, product rules, interest benchmark, and other chapter 646 exclusions determine the covered amount.

  4. 4

    The Fund selects the statutory remedy

    The Fund may continue or transfer qualifying obligations, or pay the calculated liquidation-date value with statutory interest.

How the guaranty system is financed

Wisconsin funds covered obligations through member assessments assigned to segregated accounts, together with estate recoveries and other Fund receipts.

Assessment allocation
Member insurers
The life-and-annuity account generally uses each member’s Wisconsin premium and annuity consideration from the calendar year immediately before the assessment. If assessments in one year concern insurers liquidated in different years, § 646.51 (4) (d) instead uses the higher applicable three-year average.
Annual assessment cap
Defined by state law
For the life-and-annuity account, Wisconsin generally caps a calendar-year assessment at 2% of the member’s assessable Wisconsin premium and annuity consideration from the preceding calendar year. When assessments in one year concern insurers liquidated in different years, § 646.51 (4) (d) instead uses the higher applicable three-year average. A separate administrative call is non-prorated and cannot exceed $500 for an insurer in one year.
Premium-tax treatment
State-specific rule
When rates are fixed and the assessment is not recouped through premiums, Wisconsin permits a premium-tax offset of 20% in each of the five years after payment. Under § 646.51 (7), an unused credit amount may be regarded as an asset only under rules prescribed by the commissioner.
Liquidation value and assessment mechanics
Section 646.35 permits a current-loss payment instead of continued contract terms. Section 646.51 generally uses the prior-year life-and-annuity base, retains a higher applicable three-year average for the specified multiple-liquidation case, and separately authorizes a non-prorated administrative call of no more than $500 per insurer each year.

What to know before buying

  • The Fund is a post-liquidation backstop with statutory limits and remedy choices, not a reason to choose one annuity or carrier.
  • Wisconsin’s trade-practices law bars using the Security Fund in insurance advertising, marketing, or sales.

How state protection differs from FDIC insurance

  • What it covers
    State protection: The multi-line Security Fund responds to covered insurance obligations after insurer liquidation.
    FDIC: The FDIC responds to failures of insured depository institutions.
  • What system stands behind it
    State protection: Wisconsin insurers are assessed through segregated Fund accounts.
    FDIC: Insured banks are assessed under the federal system.
  • Coverage-limit basis
    State protection: One risk, loss or life shares a flat $300,000 ordinary ceiling.
    FDIC: One depositor’s coverage is organized by bank and ownership category.
  • Whether it applies to annuities
    State protection: A qualifying Wisconsin annuity may become a chapter 646 Fund obligation.
    FDIC: The Wisconsin annuity is not FDIC-insured.

Sources and last verified

Last verified: September 17, 2026