State RegulationsNC specificDifficulty 3/5
Which statement correctly describes the North Carolina Life and Health Insurance Guaranty Association's limits for unallocated annuity contracts?
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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) and (d)(4), a participant in a governmental retirement plan (such as a 401(k), 403(b), or 457 plan) is protected up to $300,000 in present value of annuity benefits, including net cash surrender and withdrawal values, while any other unallocated annuity contract holder is protected up to $5,000,000 regardless of the number of contracts. The statute deliberately separates governmental plan participants from other large institutional contract holders.
Why the other options are wrong
- A) The $5,000,000 limit belongs only to non-governmental unallocated annuity contract holders; governmental plan participants are capped at $300,000.
- C) The $300,000 figure is the governmental-plan-participant cap and applies to the person, not per contract, and other holders get far more.
- D) One million dollars is the structured settlement limit; unallocated annuity limits are set by holder type, not per contract.
Memory hook
Government folks get three hundred grand; everyone else unallocated gets five million.