Guaranty fund limits · IL
Illinois annuity guaranty fund limits
If an annuity carrier becomes insolvent, the Illinois life and health insurance guaranty association steps in for Illinois residents up to a statutory limit — currently $250,000 in present value of annuity benefits per individual, per insolvent insurer. That limit is a floor of protection, not a description of your contract.
Annuity limit
$250,000
Present value, per individual, per insurer.
Basis
NAIC model
Illinois follows the $250,000 model limit adopted by most states.
Limits are set by state statute and can change. Confirm the current figure with the Illinois association through NOLHGA before relying on it.
How the limit is actually applied
- Coverage follows the owner's state of residence at the time the carrier is placed in liquidation, not the state where the contract was signed or where the carrier is domiciled.
- Limits apply per individual, per insolvent insurer — not per contract. Two contracts with the same carrier are aggregated; the same amount held with two different carriers is generally covered separately.
- The limit is stated as present value of annuity benefits, not as premium paid or as the account value shown on a statement.
- Guaranty associations are funded by assessments on the other licensed insurers in the state. They are not a government guarantee and are not insured by any federal agency.
- Producers and carriers are prohibited in most states from using guaranty association coverage as a selling point. If it was used in a sales conversation, that is worth noting.
What this means for a IL owner
The practical use of the $250,000 figure is as a concentration test. A contract comfortably inside the limit carries a different profile than one that sits well above it, and the difference has nothing to do with the crediting rate on the front page of the brochure. Owners with balances above the limit sometimes hold contracts across two unaffiliated carriers for that reason.
Coverage is also not a substitute for carrier strength. Guaranty association protection only becomes relevant after an insolvency and a liquidation order — a rare, slow process. The A.M. Best financial strength rating on your carrier is the forward-looking signal; the guaranty limit is the backstop behind it.
Illinois regulates annuity suitability and replacement activity through the Department of Insurance, which requires disclosure comparing an existing contract to a proposed one before a replacement is completed. For Illinois owners, the practical value of that paperwork is that it forces the surrender schedule and rider charges of both contracts onto the same page.
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Get My Free ScoreEducational content only. Guaranty association coverage limits are set by state statute and administered by the association in the owner's state of residence; the association and the state regulator are the authoritative sources. Coverage may not be used in the solicitation of an annuity. Nothing on this page is a recommendation, an offer, or a guarantee of coverage.