State RegulationsVA specificDifficulty 2/5
A retiree holds an annuity from an insurer that is declared insolvent. Under the VLASIGA Notice of Protection, what is the maximum guaranty-association protection that applies to the annuity, measured by its present value including cash values, before considering the aggregate cap?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
The Commission-approved VLASIGA Notice of Protection, operating under the guaranty-association chapter of the Code of Virginia (Va. Code § 38.2-1700 et seq.), caps protection for annuities at $250,000 measured by present value including cash values. However large the annuity's actual value may be, protection stops at the annuity limit, with any excess exposed to the insolvency. The aggregate $350,000 cap operates as an overall ceiling across an individual's coverages with the insolvent insurer — it is not the product-level annuity limit itself.
Why the other options are wrong
- A) $500,000 is the ceiling for health benefit plans; annuities carry their own lower limit under the Notice of Protection.
- B) $350,000 is the aggregate cap per individual per insolvency; the annuity-specific limit of $250,000 is what applies to the annuity itself.
- C) Annuities are not treated like life death benefits for this purpose; the Notice sets the annuity limit at $250,000.
Memory hook
Annuities cap at $250,000 — a quarter million of protection, whatever the contract is worth.