CLHIGA Coverage Limits (2026): California Annuity Guaranty Fund Explained
Written & reviewed by Hans Goldstein, EA, Independent Licensed Insurance Producer · CA license 4273294 · NPN 20602398Admitted to practice before the IRS
Last reviewed 2026-10-03
Short answer
How much does California's guaranty association cover on an annuity?
If an insurer fails, the California Life and Health Insurance Guarantee Association (CLHIGA) covers 80% of an annuity's value, up to $250,000, per owner per insurance company (CLHIGA FAQ, checked September 25, 2026). Annuities are not FDIC insured; CLHIGA is the state backstop, funded by assessments on other insurers. To protect more than that, Californians often split large deposits across several A-rated carriers.
The annuity's own guarantees rest first on the claims-paying ability of the issuing insurer; CLHIGA is the backstop. Coverage is set by state law and can change, so confirm the current limit with CLHIGA.
TL;DR: The California Life and Health Insurance Guarantee Association (CLHIGA) protects California residents holding annuity contracts at insolvent carriers for 80% of value, up to $250,000 per contract owner per insurance company (aggregate cap, not per-contract). For deposits above $250K, the practical strategy is to split across multiple A-rated carriers. CLHIGA is not the same as FDIC. Annuities are not bank products and are not FDIC-insured, but they are protected by the analogous state guaranty system.
CD vs MYGA, after tax
What $100,000 earns in 5 years: CD vs MYGA, after tax
Rates used: CD 5.00%, the top nationally available 5-year CD (Bankrate, October 14, 2026); change it to the rate you are offered. MYGA 5.95%, the best A-rated rate we track as of October 13, 2026: Delaware Life Pinnacle Plus 5-year (AM Best A-, negative outlook, 7/31/2026), $100,000 and up, effective October 6, 2026 (Delaware Life rate sheet).
| CD, interest taxed every year | $118,396 |
|---|---|
| MYGA, tax-deferred, before tax | $133,507 |
| MYGA after paying tax on all the interest at withdrawal | $123,019 |
| Tax deferral alone adds about | $841 |
| MYGA ahead of the CD, after tax | $4,623 |
Assumes 22% federal and 9.3% state income tax, no withdrawals, rates held for the whole term. MYGA interest is taxed as ordinary income when you withdraw it, not as capital gains. Gains taken before age 59 1/2 can owe a 10% IRS penalty, and cashing out early can cost a surrender charge. In an IRA both grow tax-deferred, so the edge there is the rate alone. Bank and credit union deposits are FDIC or NCUA insured up to the limits; a MYGA is backed by the issuing insurer's claims-paying ability and your state's guaranty association up to its limits, not the FDIC. General education, not tax, legal or financial advice.
What CLHIGA is and how it works
CLHIGA is California's statutory safety net for life and health insurance policyholders. Created under California Insurance Code §§1067-1067.18, it functions much like FDIC does for bank deposits, except it covers insurance contracts, and the coverage limits and triggers differ.
Mechanics:
- Every life and health insurance company licensed in California must be a CLHIGA member.
- If a member carrier becomes insolvent (rare for A-rated carriers; the historical record is dominated by small or B-rated carriers), CLHIGA steps in.
- CLHIGA either continues the contracts in force under a successor insurer, or pays benefits up to statutory limits.
- CLHIGA is funded by post-insolvency assessments on remaining member insurers, not by California tax dollars.
CLHIGA coverage limits for annuities (2026)
| Coverage type | Limit |
|---|---|
| Annuity contract present value (per owner per carrier) | 80% of value, up to $250,000 |
| Annuity in benefit (income payments, per owner per carrier) | 80% of value, up to $250,000 |
| Combined aggregate cap for annuities at one carrier (per owner) | 80% of value, up to $250,000 |
| Life insurance death benefit (per insured life per carrier) | $300,000 |
| Life insurance net cash surrender value (per insured life per carrier) | $100,000 |
| Health insurance benefits | $200,000 (basic hospital, medical, surgical), $300,000 (disability/LTC) |
| Combined overall aggregate at one carrier per individual | $300,000 |
Source: CLHIGA Act, California Insurance Code §1067.02. Confirm current limits at californialifega.org.
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Who is covered
CLHIGA covers California residents at the time the carrier is declared insolvent (not the time of purchase). If you bought an annuity in California, then moved to Nevada, and your carrier later becomes insolvent, Nevada's guaranty fund applies, not California's.
Also covered:
- Out-of-state residents whose carrier is domiciled in California and whose home state has no equivalent guaranty fund (rare).
- Beneficiaries of deceased California residents.
What is NOT covered by CLHIGA
- Separate-account assets in variable annuities: these are held outside the insurer's general account and pass through to the holder directly.
- Contracts issued by an insurer not licensed in California at the time of purchase.
- Synthetic GICs and unallocated annuity contracts above certain limits.
- Contracts for which premiums were never paid.
- Speculative excess interest credits or any portion of cap rate / participation rate above what's contractually guaranteed.
The California §1067.02 disclosure restriction
California is one of several states that prohibits insurance agents from referencing the guaranty association in solicitation. The intent is to prevent agents from using CLHIGA as a sales crutch ("don't worry, even if the carrier fails, you're covered"). Agents who violate §1067.02 face license discipline.
This page is editorial commentary, not a solicitation, and is permitted. You can also review CLHIGA's official site at californialifega.org for unrestricted authoritative information.
Split-carrier strategy for large deposits
The CLHIGA $250K cap is the single biggest driver of "carrier diversification" in California annuity planning. Practical structuring:
| Deposit size | Carrier count | Example structure |
|---|---|---|
| Under $250K | 1 | $200K Athene 5-yr MYGA |
| $250K-$500K | 2 | $250K Athene + $250K American National |
| $500K-$750K | 3 | + $250K Oceanview Life |
| $750K-$1M | 4 | + $250K at a fourth carrier rated A- or better |
| $1M+ | 5+ | Add Aspida, Equitrust, Nassau, etc. |
The trade-off: managing 4-5 carrier relationships, 4-5 maturity dates, 4-5 surrender schedules. Most California buyers above $500K accept this complexity for the $1M+ of effective protection it creates.
Joint contracts and CLHIGA
A joint annuity contract (e.g., joint with right of survivorship between spouses) generally qualifies for double the $250K limit ($250K per joint owner) for a combined $500K of CLHIGA coverage on a single contract. The exact treatment depends on contract structure and whether each spouse is documented as a contract owner versus a beneficiary. Confirm with CLHIGA on your specific contract before relying on the $500K assumption.
Historical insolvency context
Major California-licensed life/annuity insurer insolvencies in the last 30 years:
- Executive Life Insurance Company of California (1991): the largest U.S. life insurer insolvency at the time; CLHIGA paid out heavily.
- First Capital Life (1991)
- Mutual Benefit Life (1991)
- Confederation Life (1994)
- Penn Treaty (2017): primarily LTC, not annuity.
The track record for A-rated and A+-rated carriers is extremely clean. The Executive Life case is the most-cited historical example, and policyholders were in the end made largely whole through CLHIGA and successor insurer arrangements (though the resolution took years).
Related California guides
- Best MYGA rates in California
- California annuity tax treatment
- CD vs MYGA after-California-tax
- Best California CD rates
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CLHIGA FAQ
What is CLHIGA?
The California Life and Health Insurance Guarantee Association (CLHIGA) is a nonprofit statutory entity created by California law to protect policyholders when a member insurance company becomes insolvent. All life and health insurers licensed in California must be CLHIGA members. CLHIGA is funded by assessments on member insurers, not by California tax dollars.
How much does CLHIGA cover on annuities?
$250,000 in present value of annuity benefits per contract owner per insurance company, including all annuity contracts the owner holds at that one insurer (aggregate cap, not per-contract).
Does CLHIGA cover variable annuities?
Only the fixed/guaranteed portion. The separate-account investment portion of a variable annuity is not covered by CLHIGA. Those assets are held outside the insurer's general account and are not part of the insolvency estate.
Are my joint annuity holdings covered for double the limit?
Generally yes for joint-with-spouse contracts. Each spouse is treated as a contract owner up to $250K each, so a true joint contract can have up to $500K of CLHIGA coverage. Confirm with CLHIGA on your specific contract structure.
What happens if I move out of California after buying my annuity?
CLHIGA covers California residents at the time of insolvency, not at the time of purchase. If you move to Nevada and your carrier later becomes insolvent, the Nevada guaranty fund applies, not California's. Coverage limits vary by state.
Can my insurance agent tell me about CLHIGA before I buy?
No. California Insurance Code §1067.02 prohibits insurance agents from referencing CLHIGA in solicitation or sales materials. This page is editorial/informational, not solicitation. You can review CLHIGA details directly at californialifega.org.
What is the difference between CLHIGA and FDIC?
FDIC insures bank deposits (checking, savings, CDs) up to $250K per depositor per bank. CLHIGA covers insurance company annuity and life policies up to $250K per contract per carrier. They are structurally similar but cover different products. CLHIGA is funded by insurer assessments; FDIC is funded by federal bank assessments.
How do I split a $500K annuity to stay within CLHIGA coverage?
Buy two $250K MYGAs from two different carriers (e.g., $250K Athene + $250K American National). Each contract sits under a separate CLHIGA $250K limit, giving you $500K total coverage. For $1M, use four carriers.
Disclosure
This guide reflects publicly available rate, tax, and state-guaranty-fund information as of the date stated above. MYGA rates, CD rates, state tax brackets, and guaranty-fund limits change frequently. Always confirm current values against the most recent carrier disclosure, bank rate sheet, and your state guaranty association's official website before purchasing. This article is general information for educational purposes; it is not a personalized recommendation, solicitation, or offer of any specific product, and is not tax advice. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers; appointment status with any specific carrier discussed may vary. No compensation has been received from any carrier or bank in connection with publication of this review. Always read the actual contract and consult a licensed advisor and tax professional before purchasing any annuity or CD. AM Best ratings, state tax law, and IRC tax treatment are subject to change.