State annuity protection

Wisconsin Annuity Guaranty Protection: $300,000 Limit and Liquidation-Date Value Explained

Wisconsin generally provides up to $300,000 in guaranty protection on a single risk, loss, or life. For an annuity, the Fund may satisfy its obligation by paying the current value of the eligible loss claim as of the liquidation date rather than continuing the original contract.

Wisconsin annuity protection at a glance

Annuity protection limit
$300,000
For an annuity, §646.35(6)(a) permits the Fund to pay the then-current value of the eligible loss claim under §645.68(3) as of the liquidation date, with interest to the date of payment
Overall benefit cap
$300,000
The separate $500,000 limit applies only to specified property, liability, and comprehensive or major-medical disability insurance claims. It does not increase the $300,000 annuity limit.
Who provides protection
Wisconsin Insurance Security Fund
The Wisconsin Insurance Security Fund generally provides protection only after an unstayed liquidation order has been entered against the insurer. Administrative assessments are governed separately under Wisconsin law.
Insurer requirement
Member insurer
The claim must arise from covered business that is assessable under Chapter 646 and satisfy the insurer-authorization requirements in §646.31.

How the $300,000 limit works

The Fund generally pays no more than $300,000 on a single risk, loss, or life, regardless of the number of policies or contracts involved.

Multiple covered policies or contracts involving the same risk, loss, or life at the same insurer generally share the $300,000 Fund limit.

A separate insurer liquidation is evaluated separately. For an annuity, the Fund may elect to satisfy its obligation using the current value of the eligible loss claim as of that insurer’s liquidation date.

The separate $500,000 limit applies only to specified property, liability, and comprehensive or major-medical disability insurance claims. It does not increase the $300,000 annuity limit.

  • A qualifying structured-settlement payee, or beneficiary of a deceased payee, may qualify under Wisconsin’s special residency rules, subject to the Fund’s general $300,000 maximum on a single risk, loss, or life.

A $350,000 annuity example

Assume a Wisconsin resident has an eligible fixed annuity and the Fund determines that the current value of the covered loss claim as of liquidation is $350,000.

Illustrative current covered loss value

$350,000

Maximum illustrated Fund protection

$300,000

Illustrative amount above the Fund limit

$50,000

In this example, up to $300,000 falls within the Fund’s statutory limit. The remaining $50,000 may remain a claim against the receivership estate, and the Fund may satisfy its covered obligation by paying the liquidation-date current value rather than continuing the original annuity terms.

This example uses an assumed current covered loss value as of liquidation. That statutory amount is not necessarily identical to the displayed account value, cash surrender value, or total premiums paid.

Which annuities are covered?

  • Fixed annuity

    Generally covered

    Fixed annuities may qualify, subject to Wisconsin’s eligibility rules, $300,000 Fund limit, and the Fund’s option to pay the current value of the covered loss claim as of liquidation.

  • Fixed indexed annuity (FIA)

    Generally covered

    FIAs may qualify for insurer-guaranteed benefits. Certain nonguaranteed, excess, uncredited, or forfeitable index-linked amounts may be excluded. When index-linked value is credited less frequently than annually, Wisconsin treats the liquidation 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. If the Fund uses the liquidation-date current-value option, statutory interest-rate limits also apply, so interest above Wisconsin’s protected thresholds may be excluded.

  • 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. However, to the extent an annuity benefit is specifically guaranteed to an individual under the contract or certificate, that guaranteed benefit is not treated as an unallocated annuity benefit.

Who may qualify?

  • Fund coverage generally requires an unstayed order of liquidation, and residency for life, disability, and annuity claims is generally determined as of the liquidation order date.
  • Eligibility depends on the claimant’s statutory role, which may include a policyholder, certificate holder, insured, beneficiary, assignee, payee, or structured-settlement payee, depending on the claim.
  • For ordinary life and annuity claims, Wisconsin residency at the time of the liquidation order is generally central to eligibility, subject to limited statutory exceptions for certain nonresidents.
  • Certain nonresidents may qualify when the annuity was issued by a Wisconsin-domiciled insurer, 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.
  • The claim must arise from covered business that is assessable under Chapter 646 and satisfy the insurer-authorization requirements in §646.31.

What is not covered?

  • Unallocated annuity contracts are generally excluded, except to the extent specific annuity benefits are guaranteed to an individual under the contract or certificate.
  • Nonguaranteed benefits, portions where the contract owner bears the investment risk, and benefit amounts based on interest or crediting rates above Wisconsin’s statutory limits may be excluded. Special treatment applies when index-linked value is credited less frequently than annually.
  • The Fund generally does not cover claims based on marketing materials, misrepresentations, extra-contractual claims including punitive or exemplary damages and bad-faith damages, penalties, consequential or incidental damages, or side letters, riders, or other documents that did not satisfy applicable filing or approval requirements.
  • A qualifying structured-settlement payee, or beneficiary of a deceased payee, may qualify under Wisconsin’s special residency rules, subject to the Fund’s general $300,000 maximum on a single risk, loss, or life.
  • Wisconsin’s separate $500,000 limit applies to specified property, liability, and comprehensive or major-medical disability insurance claims; it does not increase annuity protection above the $300,000 Fund limit.
  • Wisconsin coordinates coverage with other state security funds and governmental insurance or guaranty programs to prevent duplicate recovery; applicable outside recoveries generally must be exhausted or reduce the Wisconsin Fund payment.

What happens after an insurer fails?

  1. An unstayed liquidation order triggers Fund eligibility

    Unlike many life and health guaranty-association statutes, Wisconsin generally requires an unstayed liquidation order before a Chapter 646 claim becomes eligible; rehabilitation alone does not trigger Fund claim coverage.

  2. The annuity current-value option is evaluated

    For life and annuity claims, residency is generally determined as of the liquidation order date. If the Fund elects the annuity current-value option under §646.35(6)(a), that same date is used to determine the current value of the eligible loss claim under §645.68(3). That amount is not necessarily identical to account value, cash surrender value, or premiums paid.

  3. Eligibility, exclusions, and the $300,000 Fund limit are applied

    The Fund applies the statutory exclusions and the $300,000 maximum on a single risk, loss, or life. The separate $500,000 exception applies only to the specified non-annuity claim categories.

  4. The Fund selects the statutory remedy

    For covered annuities, the Fund may guarantee, assume, or reinsure the contract, assure performance of the insurer’s contractual obligations, or elect to pay the then-current value of the covered loss claim as of liquidation with interest to the payment date.

How the guaranty system is financed

The Fund is financed through assessments of member insurers, together with receivership recoveries, premiums received during continuation of coverage, investment income, and other permitted receipts, with obligations tracked through statutory accounts.

Assessment allocation
Member insurers
For the life insurance and annuities account, assessments are calculated separately for life policies and annuity contracts using Wisconsin premiums or annuity considerations from the year immediately preceding the year in which the Board authorizes the assessment, or the most recent available year if that data is unavailable. If two or more assessments are authorized in the same calendar year for insurers liquidated in different years, §646.51(4)(d) modifies the premium base used for the 2% annual limitation by using the higher applicable three-year annual-premium average.
Annual assessment cap
2%
Annual assessment cap — 2%. For the life insurance and annuities account, annual assessments are generally limited to 2% of the member insurer’s applicable assessable Wisconsin premiums or annuity considerations, with life and annuity assessments calculated separately. A special three-year-average rule modifies the cap calculation when multiple assessments in the same calendar year relate to insurers liquidated in different years. A separate non-prorated administrative assessment may not exceed $500 per insurer in a year.
Conditional tax offset
20% per year for five years
Conditional tax offset — 20% per year for five years. If premium rates for the affected class are fixed so the insurer cannot recoup the assessment through higher rates, the insurer may generally offset 20% of the Wisconsin portion of the assessment against Wisconsin tax liabilities other than real-property taxes in each of the five calendar years following payment. Amounts available for future tax offsets may be treated as insurer assets only as permitted by rules issued by the Commissioner.
Wisconsin-specific liquidation and eligibility rules
For an annuity, §646.35(6)(a) allows the Fund to satisfy its obligation by paying the then-current value of the eligible loss claim as of liquidation, with interest to the payment date, instead of continuing the original contract. A Wisconsin-resident structured-settlement payee, or beneficiary of a deceased payee, may qualify regardless of the policyholder’s residence; certain nonresident payees may also qualify under separate rules. Wisconsin generally treats the legal owner named in a life or annuity contract, or a valid assignee properly recorded by the insurer, as the policyholder; a beneficial interest alone does not establish ownership. With court approval, the Fund may temporarily restrict or place a lien on certain cash surrender values, policy loans, or similar rights. 2023 Wisconsin Act 212 merged the life and annuity accounts and changed the assessment base to the year immediately preceding assessment authorization.

What to know before buying

  • For existing coverage, remember that Wisconsin generally applies one $300,000 Fund ceiling to a single life in a liquidation, regardless of the number of covered annuity contracts.
  • Wisconsin law prohibits insurers and intermediaries from using Insurance Security Fund protection as a reason to purchase insurance or an annuity.

How state protection differs from FDIC insurance

  • What it covers
    State protection: The Wisconsin Insurance Security Fund may pay eligible claims and continue certain covered policies and annuities after an unstayed liquidation order is entered against a covered insurer.
    FDIC: The FDIC protects eligible bank deposits when an insured depository institution fails.
  • What system stands behind it
    State protection: The Wisconsin Insurance Security Fund is a statutory nonprofit organization, not a state agency, and is funded primarily through assessments of participating insurers together with other Fund receipts.
    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: The Fund generally pays no more than $300,000 on a single risk, loss, or life, regardless of the number of policies or contracts, and never more than the insurer’s covered loss obligation.
    FDIC: Federal deposit-insurance coverage depends on the depositor, insured bank, and ownership category.
  • Whether it applies to annuities
    State protection: Eligible annuity claims may receive Wisconsin Insurance Security Fund protection, subject to Chapter 646’s eligibility rules, exclusions, and limits.
    FDIC: Annuities are not FDIC-insured deposits.

Sources and last verified

Last verified: October 14, 2026