A worksheet to add up your coverage per insurer against guaranty limits

Checking whether your life insurance and annuities fit inside your state's guaranty limits takes about thirty minutes and a pencil. You list every contract, group the amounts by insured person and by insurer, and compare each total with the limit. This post gives you the steps, a worked example with the arithmetic shown, and blank tables to copy.

The worksheet measures one thing: how much of what you own could fall outside the guaranty system if one insurer were ordered into liquidation. It does not measure whether that is likely, and it cannot tell you whether to change anything. For the second question, see the decision step near the end.

What you need before you start

Gather these, for every person in the household who owns coverage or is insured by it:

• The latest annual statement or in-force illustration for each permanent policy and annuity. These show the death benefit and the cash surrender value.
• The policy page or declarations page for each term policy, which shows the face amount and the insurer's legal name.
• The legal name of each insurer. The brand on a marketing letter may differ from the company that issued the contract. The legal name is on the policy page.
• The state where you live now. Guaranty coverage generally follows your state of residence when the insurer is ordered into liquidation.
• Your state's limits, from the state guaranty association coverage lookup tool or the state life and health guaranty associations guide, and ideally confirmed with your state's association.

If you cannot find a contract, the where to keep your policy and who to tell about it guide suggests where policies tend to hide, and the NAIC policy locator can help find an older one.

Group coverage through an employer, structured settlements and health or long-term care policies follow different rules and are outside this worksheet.

Step 1: list every contract

Make one row per contract. Use a table like this:

Notes on the columns:

• Insured or annuitant matters because most limits apply per insured life. For an annuity, the relevant person is generally the owner or annuitant, depending on the contract and state.
• Type can be term, whole life, universal life, deferred annuity and so on. A term policy has a death benefit and no cash value, so leave the cash column blank.
• Cash surrender value is the figure after surrender charges and loans. It is on the annual statement.
• Annuity value is the current accumulation value or, if you are already receiving payments, the contract's remaining value as the insurer reports it.

Use current numbers and write the date on the sheet. Cash values and annuity values change every year.

Step 2: group by person and by insurer

Now rearrange the rows so that each person has a block, and within the block, each insurer has a subtotal. Add the death benefits together, the cash values together and the annuity values together, for that person at that insurer.

The grouping is the whole point. A $200,000 policy and a $150,000 policy with the same insurer on the same life are, for this exercise, a single $350,000 holding. The same two policies with different insurers are two holdings, each under the baseline $300,000 limit.

Step 3: write down the limits

Look up your state and copy the numbers into a small box:

For orientation only: the common baseline, as the state guaranty guide summarizes from NOLHGA information as of June 1, 2025, is $300,000 for death benefits and $100,000 for cash surrender value, with $250,000 a common figure for annuities and a combined cap of $300,000 in many states. Some states go higher, and California covers 80% up to $300,000 of the death benefit (see California). Do not rely on this paragraph for your own state; copy the real numbers from the lookup tool or the association's website.

Step 4: compare each holding with its limit

For every row in your Step 2 table, calculate the headroom:

Headroom = limit minus total. A positive number is room to spare. A negative number is the amount that would sit above the limit, the gap.

If your state uses a percentage rule, first multiply the total by the percentage, then compare with the cap. For example, with an 80% rule and a $300,000 cap, a $250,000 holding is first reduced to $200,000, which is under the cap, so the protected amount is $200,000 and the gap is $50,000.

Step 5: test the overall cap

If your state has a combined cap, add the benefits for each person at each insurer that the cap includes. Whether it counts the death benefit or the cash value of a permanent policy, and how it treats an annuity already paying out, is set by state law. Because of that uncertainty, run the test both ways when it matters:

• Test A: death benefit plus annuity value.
• Test B: cash surrender value plus annuity value.

If both tests land under the cap, you have no combined-cap issue. If only the lower one does, call the association with the specific question.

A worked example

The following is hypothetical: the people, insurers and numbers are invented, and the state is assumed to be a baseline state with a $300,000 death benefit limit, a $100,000 cash value limit, a $250,000 annuity limit, and a $300,000 combined cap on life and annuity benefits.

Dana and Chris own these contracts. Dana is the insured on the first five, and Chris on the last two.

Step 2, grouping:

Step 4, headroom:

• Dana at Alpha: $300,000 minus $500,000 = negative $200,000. Gap: $200,000.
• Dana at Beta: death benefit $300,000 minus $250,000 = $50,000 of room; cash value $100,000 minus $60,000 = $40,000 of room.
• Dana at Gamma: death benefit $300,000 minus $200,000 = $100,000 of room; cash value $100,000 minus $70,000 = $30,000 of room; annuity $250,000 minus $180,000 = $70,000 of room.
• Chris at Alpha: $300,000 minus $250,000 = $50,000 of room.
• Chris at Delta: $250,000 minus $320,000 = negative $70,000. Gap: $70,000.

Step 5, combined cap, Dana at Gamma:

• Test A: $200,000 death benefit + $180,000 annuity = $380,000, which is $80,000 over the $300,000 cap.
• Test B: $70,000 cash value + $180,000 annuity = $250,000, which is $50,000 under the cap.

The two tests disagree, so Dana should ask the association which one applies. If Test A applied, Dana's gap at Gamma would be $80,000. If Test B applied, none.

Summary for the household:

The worksheet turned a vague worry into three concrete items and one question. It also shows what is not a problem: Dana's Beta policies, which look like a lot of coverage, are well inside every limit.

A second example with a percentage rule

The following is also hypothetical. Say Priya lives in California, where the death benefit is covered at 80% up to $300,000. She is the insured on three contracts:

Group by insurer. At Orion the death benefits are $250,000 + $300,000 = $550,000. Applying the 80% rule gives 0.80 x $550,000 = $440,000, which is above the $300,000 cap, so the protected amount is $300,000 and the gap is $550,000 - $300,000 = $250,000. At Vega, 0.80 x $400,000 = $320,000, again above the cap, so the protected amount is $300,000 and the gap is $100,000.

Notice what happened. Because the percentage rule and the cap both bind, the arithmetic has two stages, and the order matters: apply the percentage first, then the cap. Notice also that moving $150,000 of coverage from Orion to a third insurer would shrink the Orion gap to $100,000 (0.80 x $400,000 = $320,000, capped at $300,000, gap $100,000) and leave the third insurer's $150,000 well inside its limit (0.80 x $150,000 = $120,000 protected, gap $30,000). The total gap would fall from $350,000 to $230,000, but not to zero, because the 80% rule leaves a $30,000 gap on every $150,000 of coverage. That is a reminder that a percentage state has a floor under the gap that splitting cannot remove.

The cash value at Orion is $55,000, well under a $100,000 cash-value limit (with the 80% rule it would be $44,000 protected), so the cash side is not the concern. Check your own state's page, such as the California guide, for how it describes the cash value limit.

Special cases to check by phone

Some holdings do not fit the simple table. Ask the association, or your state's insurance department, how it treats:

• Joint or survivorship policies, which insure two lives under one contract. Limits apply per insured life in most descriptions, but how a single contract is split between two lives is a question for the association.
• Policies owned by a trust or a business. Coverage usually turns on the insured or the beneficiary rather than the owner's name, but state rules differ, and the details can matter for large trust-owned policies.
• Policy loans. A loan reduces the cash value and, if unpaid, the death benefit. Use the net figures from the statement.
• Annuities in payout. An annuity already paying income may have a different limit from one still accumulating.
• Contracts issued by a company licensed in your state but based elsewhere. Your state of residence's association still generally covers you, as the state guaranty guide explains.

Step 6: decide whether to act

A gap on paper is not an instruction to move money. Weigh these questions for each gap:

1. How strong is the insurer? The AM Best, S&P, Moody's and Fitch ratings explained guide explains how to read ratings from AM Best, S&P, Moody's and Fitch. A high rating reduces the chance that the gap ever matters, though it is an opinion and can lag events.
2. What would fixing it cost? For a term policy, adding a policy with a second insurer means a new application, new underwriting at today's age and health, and a new contestability period. For a permanent policy or annuity, moving money may trigger surrender charges, taxes and the loss of guarantees. A section 1035 exchange can move a policy or annuity without immediate tax on the gain, but surrender charges and new terms may still apply.
3. Can you add rather than move? The least disruptive way to reduce a gap on new money is often to place the next purchase with a different insurer, instead of undoing an existing contract.
4. How big is the gap compared with your needs? A $70,000 gap on an annuity you can afford to lose a portion of is a different matter from a $200,000 gap on the term policy that protects your children.
5. What will you do about the added complexity? More insurers mean more beneficiary forms and more paperwork for survivors.

A rough decision list:

• If the gap is zero, record the date and recheck in a year or after a big change.
• If the gap is small relative to your finances and the insurer is highly rated, you may reasonably do nothing.
• If the gap is large and the policy cannot easily be replaced, such as a permanent policy on an older insured, talk to a fee-only planner before touching anything.
• If the gap is on a term policy that you are about to renew or replace anyway, consider splitting the new coverage across two insurers.
• If you are unsure how your state counts a holding, call the association before drawing conclusions.

Never cancel a policy to fit under a limit before checking what replacing it would cost. The surrender or the loss of insurability can cost far more than the risk avoided.

A blank worksheet to copy

Inventory (date: ______)

Per person, per insurer

Combined cap (if any)

Mistakes the worksheet tends to catch

• Counting by policy instead of by insurer. Two small policies with one company add up.
• Using the brand name instead of the legal insurer. Companies in the same group may be separate legal entities with separate counts. The policy page shows which one issued your contract; ask the insurer if it is unclear.
• Forgetting a forgotten policy. An old employer-purchased or conversion policy can sit with the same insurer as a new one.
• Using last year's cash value. Values change, and universal life and annuity values move with crediting and withdrawals.
• Applying another state's limits. Use the state where you live.

More worked cases are in four households and how guaranty association limits would apply to each, and annuities have their own complications covered in if an annuity company fails: how state guaranty coverage responds.

Key takeaways

• Add up what you own by insured person and by insurer, then compare each total with your state's limits; the limits apply to those totals, not to individual policies.
• Calculate headroom as limit minus total; a negative number is the gap that would sit outside guaranty protection.
• If your state has a combined cap or a percentage rule, run the test both ways and ask the association how it counts permanent policies and annuities.
• A gap is a reason to think, not a reason to surrender; weigh the insurer's strength, the cost of changing and the added paperwork.
• Redo the worksheet when you buy, sell or exchange a contract, move to another state or after any large change in values.