A custodian holds an unallocated annuity contract funding a private, non-governmental retirement arrangement, and the issuing member insurer becomes insolvent. Under North Carolina law, the maximum Guaranty Association protection for the contract holder is:

Why D is correct

Under G.S. 58-62-21(d)(3) and (4), a participant in a governmental plan is protected up to $300,000 in present value annuity benefits, while any other unallocated annuity contract holder is protected up to $5,000,000, regardless of the number of contracts held. The $1,000,000 figure applies to structured settlements per payee under G.S. 58-62-21(d)(5), and unallocated annuities are covered by the Association — they are not excluded from the Act.

Why the other options are wrong

• A: $300,000 is the cap for governmental plan participants under G.S. 58-62-21(d)(3); a non-governmental contract holder gets the higher $5,000,000 limit under (d)(4).
• B: $1,000,000 per payee is the structured settlement limit under G.S. 58-62-21(d)(5), a different benefit category from unallocated annuity contracts.
• C: Unallocated annuities are covered by the Association up to $5,000,000 for non-governmental contract holders (G.S. 58-62-21(d)(4)); they are not excluded from protection.

Memory hook

Gov plan $300k, everyone else unallocated $5M.

Why C is correct

Under G.S. 58-62-21(d)(4), the contract holder of any other unallocated annuity is protected up to $5,000,000 in present value benefits, regardless of the number of contracts. By contrast, participants in governmental plan unallocated annuities are limited to $300,000 under G.S. 58-62-21(d)(3), so the source of the contract decides the tier.

Why the other options are wrong

• A) The $300,000 figure is the limit for governmental-plan participants under G.S. 58-62-21(d)(3), not for other unallocated annuity contract holders.
• B) The $500,000 cap is the health benefit plan limit under G.S. 58-62-21(d)(2a) and does not apply to unallocated annuities.
• D) The $1,000,000 limit is reserved for structured settlement benefits under G.S. 58-62-21(d)(5).

Memory hook

Non-governmental unallocated annuity: five million flat, contracts combined.

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.