Winning Cash For Life Can Have A Terrifying Dark Side

When John Wyllie won the Publishers Clearing House (PCH) "Forever Prize" in 2012, it sounded like a dream come true. He quit his job and began to prepare for a life where he'd get $5,000 a week for life (about $260,000 a year) with the added promise that after he passed, a loved one of his choosing would continue receiving the same payments. Winners like Wyllie typically have two options: Take a smaller, one-time lump sum payment or commit to the annuity plan with recurring checks for decades. Choosing the lump sum comes with serious money management responsibilities, but an annuity stretches out the paycheck for many years and reduces the risk of blowing away the jackpot.

Sadly, this didn't turn out well, because in 2025, only 13 years later, the only thing that could stop an annuity from being a good thing happened. Publishers Clearing House filed for Chapter 11 bankruptcy, ending payments to previous winners. Wyllie suddenly went from guaranteed income for life to nothing, forcing him to sell belongings and fear losing his home. KGW8, an NBC News Affiliate that covered the story, reported that bankruptcy records show that Publishers Clearing House owes money to at least 10 other prize winners, most of whom are owed more than $2 million each.

It's highly unlikely these winners would get paid despite bankruptcy proceedings. They are unsecured creditors who are low-priority after secured creditors (like banks with collateral), employees, and taxes take their share of the money. Since ARB Interactive, the gaming firm that acquired PCH, won't be honoring wins from before the acquisition, all that's left for the abandoned winners is what remains in the estate when all primary debts are settled.

The main difference between the annuity PCH offered and the type you get from an insurance company is that you have to buy the latter. Practically, the effect is still the same: The payments are guaranteed by the issuing insurance company, and the promise is only as strong as the company's ability to pay. Unlike a bank account, annuities, like safe deposit boxes, come with an unsettling truth: They are not protected by the FDIC.

However, there are state guaranty associations that step in if an insurance company fails. These groups act as a financial safety net, and while limits vary by state, most will cover up to $250,000 in annuity benefits per policyholder, per company. That means if you bought a $500,000 annuity from one insurer, only half might be protected if that company went belly up.

To avoid ending up like the PCH winners, you should adopt a forward-thinking annuity strategy based on diversification and diligence. Instead of putting all your eggs in one basket, split large annuity purchases across multiple insurers to stay under coverage caps. And before you buy, make sure to check the financial ratings of the insurance company.