Are Annuities FDIC Insured? No. Here Is What Protects Them

Written by Hans Goldstein, independent licensed insurance producer · CA license 4273294 · NPN 20602398
Published October 3, 2026

Are annuities FDIC insured?

No. The FDIC insures deposits: checking, savings, money market deposit accounts and CDs, up to $250,000 per depositor, per bank, per ownership category. Its own list of products it does not insure names annuities and life insurance, and adds that this is true even when you buy them at an insured bank (FDIC: products not insured). If a teller or bank-branch advisor sells you an annuity, the disclosure you sign should say “not FDIC insured, not a deposit, not guaranteed by the bank.” That is the accurate description.

An annuity is a contract with an insurance company, so its protection comes from the insurance system instead of the federal government. That system has three layers, and for a fixed annuity or MYGA they are strong ones.

What protects an annuity instead of the FDIC

1. The issuing insurer. The rate and principal guarantees in a fixed annuity are contractual and are backed by the financial strength and claims-paying ability of the issuing insurance company. Premiums go into the insurer’s general account, which state law requires to hold reserves for every contract plus capital on top.
2. State regulators. The insurance department in the insurer’s home state examines it, sets reserve rules and can place a weak company into rehabilitation before it runs out of money. In most modern cases the troubled company’s annuities are transferred to a healthy insurer and keep going.
3. The state life and health insurance guaranty association. If an insurer is liquidated, the guaranty association in your state of residence continues your contract or pays your benefits up to a limit set by state law. Every insurer licensed to sell annuities in a state must be a member, and the associations are funded by assessments on the surviving member insurers after a failure (NOLHGA).

Annuity guaranty association limits by state

The NAIC model law, which most states follow, covers at least $250,000 in present value of annuity benefits, including cash surrender and withdrawal values. 41 of the 50 states and DC use $250,000 for a deferred annuity. Connecticut, New York and Washington cover up to $500,000. Arkansas, the District of Columbia, North Carolina, Oklahoma, South Carolina and Wisconsin cover $300,000. California is the odd one out: it covers 80% of the annuity value, with the benefit capped at $250,000, so no annuity there is ever 100% covered.

Puerto Rico is not on the NOLHGA table; its figure comes from the territory’s insurance code. Two NOLHGA headline figures are not the number a MYGA owner gets: Minnesota’s $410,000 applies only to annuities already paying out for life or 10+ years and to structured settlements, and Utah’s $500,000 is a per-life cap, with $250,000 per annuity owner under Utah law. Limits change when legislatures amend their guaranty acts, so confirm with your own association before relying on a number (find your state association).

How the annuity limit actually works

• Per person, per insolvent insurer. The limit resets for each insurance company. Two $200,000 MYGAs at two different insurers are each fully covered in a $250,000 state; one $400,000 contract at one insurer is not.
• Your state of residence decides. The association in the state where you live when the insurer fails provides the coverage, not the state where the insurer is based. Move from California to Texas and your limit changes with you.
• Present value, not premium. The limit applies to the present value of your annuity benefits, including interest already credited. A $240,000 deposit that has grown to $290,000 is over a $250,000 limit.
• Partial coverage above the limit. NOLHGA’s example: a contract with a $300,000 present value in a $250,000 state is covered 83.3% ($250,000 / $300,000). You can claim the excess against the failed insurer’s estate, which often still holds substantial assets, but that part is not guaranteed (NOLHGA product FAQ).
• Aggregate caps. In most states, if you hold several policies with the same failed insurer, total benefits are also subject to an overall per-person cap, often $300,000. Check your state’s act if you own life insurance and an annuity with one company.

FDIC vs state guaranty association: side by side

The FDIC backstop is stronger and faster. The trade is the rate: on the same September 2026 rate sheets, A-rated 5-year MYGAs paid more than the best nationally available 5-year CDs (current figures on MYGA rates). For most buyers the practical answer is to stay inside the limit at each insurer, the same way large depositors spread money across banks.

Are annuities sold at banks FDIC insured?

No. Where you buy it does not change what it is. A bank or credit union that sells an annuity is acting as an insurance agency for an insurance company. The bank’s FDIC (or NCUA) coverage applies to your deposits there, not to the annuity. The annuity’s protection is the issuing insurer plus your state’s guaranty association, exactly as if you had bought it from an independent agent.

Are indexed and variable annuities covered?

Fixed indexed annuities are covered as insurance contracts, with special rules: most state acts exclude index-linked interest that has not yet been credited, and an association can continue the contract with a fixed crediting method instead of the original index. Variable annuities are eligible only for the parts the insurer itself guarantees, such as some riders. Money in the separate account subaccounts, where you carry the investment risk, is not guaranty association coverage, and its value can fall with the market (NOLHGA product FAQ). For pure principal protection, a fixed annuity or MYGA is the cleanest structure.

What happens if an annuity insurer fails, step by step

1. The home-state regulator goes to court. The insurance commissioner in the state where the insurer is domiciled asks a court for conservation or rehabilitation, an attempt to fix the company. If its troubles are too severe, the court orders liquidation (NOLHGA FAQ). AM Best then shows the insurer as E (conservation or rehabilitation) or F (liquidation) instead of a letter rating (AM Best FSR guide).
2. The liquidation order triggers the guaranty associations. Coverage is fixed on the liquidation date, under the law in force then, for the people who live in each state on that date (Texas association FAQ). The state associations work together on one plan for a multistate insurer, coordinated through NOLHGA.
3. Your contract continues or moves. Associations often transfer policies to a financially stable insurer or keep administering them. If your contract calls for premiums, keep paying them; skipping them can end your coverage.
4. Money above the limit becomes a claim. You file the excess with the court-appointed liquidator. Approved claims may be paid in part, in whole or not at all, depending on what the estate holds.
5. Above-market interest can be trimmed. Texas law, for example, does not cover the part of a contract's value based on interest that, averaged over the four years before the failure, ran more than 2 percentage points above Moody's Corporate Bond Yield Average, and after the failure the covered rate is limited to 3 points below that average (Tex. Ins. Code §463.203(b)(3)). Check your own state's act.

The pattern: covered values have been protected, but the process runs in years, not the days an FDIC bank closing takes. That is the real cost of a failure inside the limit, and the reason to check the insurer first.

Texas: what the Texas Life and Health Insurance Guaranty Association covers

The Texas Legislature created the association in 1973. It runs under Chapter 463 of the Texas Insurance Code, and every life and health insurer licensed in Texas must be a member. Beyond the $250,000 annuity figure in the table above, the full Texas limits are:

• Who is covered: Texas residents on the liquidation date. Move away and the association where you then live provides coverage.
• Not covered: policies from insurers not licensed in Texas, benefits the insurer does not contractually commit to pay or where you bear the risk (such as parts of variable or indexed annuities), interest above the statutory average, fraternal benefit certificates and certain charitable gift annuities.
• Funding: assessments on member insurers after a failure. The statute lets an insurer credit Class A assessments against its Texas premium taxes (§463.160).
• Recent cases: as of October 7, 2026 the association lists active coverage for Bankers Life Insurance Company and Colorado Bankers Life Insurance Company (North Carolina, 2024), North Carolina Mutual Life (2022), Calanthe Mutual Life (Texas, 2020), Penn Treaty and American Network (Pennsylvania, 2017) and Universal Life Insurance Co. (Alabama, 2010). Most were domiciled outside Texas; Texas residents were still covered.
• Sales rule: §463.451 bars anyone from using the association's existence to sell or induce the purchase of insurance. This section describes how coverage works; it is not a reason to buy.

Authoritative details: txlifega.org.

How to keep annuity money inside the limits

1. Look up your state’s limit in the table and remember that interest counts toward it.
2. Above the limit, split the money across insurers rather than stacking one contract. A $600,000 buyer in a $250,000 state might use three insurers at $200,000 each so each contract keeps room to grow.
3. Check the insurer before the rate: AM Best rating, capital, and renewal-rate history. Guaranty coverage is a backstop, not a reason to buy.
4. Recheck when you move states or when a contract renews; the limit that applies is the one where you live at the time of a failure.

State law prohibits insurers and agents from using guaranty association coverage to induce the purchase of a policy. This page is general education about how coverage works, not a sales representation. Coverage is subject to the limits, conditions and exclusions in your state’s guaranty association act.

Want a second opinion on your numbers?

Straight answer, no pressure.

Send your details and I’ll reply with current guaranteed rates from highly rated insurers for your amount and term, and a plain-English read on your situation. If what you have is already the right fit, I’ll say so.

First name

Email *

Term you want (years)

Dollar amount

Send me the read

Rather talk it through? Or book 15 minutes on Hans’s calendar, or call 213-414-2808.

Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer appointed with multiple carriers

We’ll email it to you. Hans replies within one business day. Privacy Policy.

Frequently Asked Questions

Related reading

• Are fixed annuities safe?
• What happens if my annuity carrier fails?
• Is a MYGA safer than a CD?
• California annuity guaranty fund (CLHIGA)
• FDIC or state guaranty fund: which is better protection?
• MYGA rates from current carrier rate sheets

Sources

• FDIC: Financial products that are not insured by the FDIC
• FDIC: Understanding deposit insurance
• NOLHGA: How you’re protected (state-by-state coverage levels)
• NOLHGA: Product coverage FAQs (annuities, indexed and variable products)
• NOLHGA: General policyholder FAQs
• NOLHGA: Contact your state guaranty association
• California Life & Health Insurance Guarantee Association (CLHIGA)
• NAIC Buyer’s Guide to Fixed Deferred Annuities