An Ann Arbor retiree owns an individual deferred annuity when the issuing insurer is declared insolvent. What is the maximum coverage provided by the Michigan Life and Health Insurance Guaranty Association for the annuity's present value, including cash values?

Why D is correct

Under M.C.L. 500.7704, the Michigan Life and Health Insurance Guaranty Association covers the present value of annuity benefits, including cash values, up to $250,000 for an individual annuity owner. A retiree whose contract value exceeds that limit bears the excess as unguaranteed exposure, which is one reason DIFS prohibits sales presentations from suggesting guaranty coverage makes annuity purchases risk-free. The annuity cap is distinct from the life death benefit cap, so the two figures must not be mixed up on the examination.

Why the other options are wrong

• A) $500,000 is the cap for basic hospital, medical, and surgical benefits, not annuity present value.
• B) $300,000 is the cap for life insurance death benefits and for disability income and long-term care benefits, not annuities.
• C) $100,000 is the cap for cash surrender value and other health benefits, not annuity present value.

Memory hook

Annuity guaranty coverage tops out at 250.