Is your life insurer safe or sinking? (Money).(Industry Overview)

The last time a wave of failures rocked the insurance industry in the early 1990s, thousands of life-insurance-policy and annuity owners were left dangling while state regulators took over the failed companies. Most policyholders were able to collect death benefits, but holders of cash-value policies and annuities had assets frozen for months. Some lost money.

The insurance industry is again facing tough times. During the first nine months of 2002, profits fell 61 percent. Weiss Ratings, which grades the financial health of insurers on a scale of A+ to F, recently downgraded 7 percent, or 71, of the 983 carriers it rates. Among the large insurers that saw grades slip into the C's: Allianz Life Insurance Company of North America (Minneapolis), Kemper Investors Life Insurance Co. (Schaumburg, Ill.), and MG Life Insurance Co. (Wilmington. Del.).

Downgradings often prompt insurance agents to harvest a fresh batch of commissions by selling you a new policy with a higher-rated company Before going for their pitch, however, weigh your options carefully, because ditching your policy may be costly.

SPOTTING LEAKY INSURERS

Five companies evaluate the security of insurance companies. (See Did You Know? at right.) Four make their ratings available at no charge on their Web sites. Weiss Ratings, which accepts no funds from the insurers it rates, charges $7.95 for its independent evaluations.

Unless an insurance company has slipped into our poor category you do not have to take immediate action; your insurer is reasonably secure. But if the company declines into the vulnerable range, check its strength periodically to see whether its condition is worsening, especially if it's at the bottom of the range.

STAND PAT OR JUMP SHIP?