State RegulationsNC specificDifficulty 3/5
A non-governmental employee benefit trust holds unallocated annuity contracts issued by an insurer declared insolvent. Regardless of the number of contracts it holds, what is the maximum guaranty association protection available to the contract holder?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under G.S. 58-62-21(d)(3),(4), a governmental plan participant (for example, in a governmental retirement plan) is protected up to $300,000 in present value annuity benefits, but any other unallocated annuity contract holder is protected up to $5,000,000 regardless of the number of contracts held. A non-governmental benefit trust therefore falls under the $5,000,000 cap.
Why the other options are wrong
- A) $300,000 in present value is the cap for governmental-plan participants, not for non-governmental unallocated annuity contract holders.
- C) $1,000,000 per payee is the structured-settlement limit under G.S. 58-62-21(d)(5).
- D) The protection is not measured per contract; the $5,000,000 cap applies per contract holder regardless of the number of contracts, and $500,000 is the health-benefit-plan figure.
Memory hook
Governmental plans $300k; everyone else unallocated $5 million.