State RegulationsGA specificDifficulty 2/5
An annuity owner in Atlanta, Georgia holds a contract with an insolvent insurer. The present value of the annuity's benefits is $400,000 and its net cash surrender value is $300,000. Which maximums apply to the Guaranty Association's obligation on this annuity?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under O.C.G.A. § 33-38-7(a)(12)(B)(iii), the Guaranty Association covers the present value of annuity benefits up to $300,000, and net cash surrender or withdrawal values up to no more than $250,000. Both of the owner's figures exceed the caps, so the association's obligation is limited to $300,000 on benefits and $250,000 on surrender value.
Why the other options are wrong
- A) These are simply the contract's own values; O.C.G.A. § 33-38-7(a)(12)(B)(iii) caps the association's obligation at $300,000 for benefits and $250,000 for surrender value.
- C) $500,000 is the health benefit plan cap under O.C.G.A. § 33-38-7(a)(12)(B)(ii), not the annuity present-value cap, which is $300,000 under (B)(iii).
- D) The annuity cash surrender value is capped at no more than $250,000 under O.C.G.A. § 33-38-7(a)(12)(B)(iii), not at the $300,000 benefit figure.
Memory hook
Annuities in Georgia: three hundred on the income promise, two-fifty on the cash-out.