Why bother buying insurance if your insurance company fails to pay claims?

Over the years, published reports have cited problems with companies denying claims on long-term-care insurance, health insurance, disability insurance and life insurance.

In the latest blow to the security of your life insurance policy, the National Association of Insurance Commissioners is considering recommending looser capital requirements for insurers. It cites a request by the American Council of Life Insurers, which says the new standards will help strengthen insurer balance sheets.

Consumer groups are fighting the change, arguing the insurance companies need those reserves to pay life insurance and annuity benefits.

"The major investment banks Bear Stearns and Lehman Brothers failed because of weak capital standards," complained J. Robert Hunter, Consumer Federation of America Director of Insurance.

"In the midst of the current financial crisis, it is unseemly even to discuss the idea of weakening the conservative statutory accounting rules that have long been in place for insurance companies," added Joseph M. Belth, editor of The Insurance Forum, Ellettsville, Ind.

NAIC President Roger Sevigny assures: "We will not contemplate making any changes that would negatively impact existing consumer-protection measures."

NAIC has a public hearing on this controversial issue set for 10 a.m. Tuesday in the Marriott Wardman Park Hotel, Washington, D.C. You can submit written comments through today to Todd Sells at tsells@naic.org.

Even if the NAIC adopts the proposal, its rules still must be adopted by individual states.

In the meantime, if you are buying life insurance or annuities, check the following:

• Is the insurer licensed to do business in your state?

• What are the terms of the contract. Does your policy cover you if payments lapse? What are the exclusions, and is there a chance they could apply?

• How is the company rated by Standard & Poors, A.M. Best, Duff & Phelps, Demotech, Fitch Investors Services and Moody's Investor Services? Understand what the rating means. Make certain it is current.

Beware of companies that quote a much lower price or higher yield than others. It may be taking greater risk or have too many high-risk investments. Illustrations may be based on artificially high hypothetical interest rates.

Make sure your policy is covered by the state's guaranty association in case an insurance company goes belly-up, and know coverage limits. Maximum protection offered by the Pennsylvania Life & Health Insurance Guaranty Association for a life insurance death benefit or annuity benefit is $300,000 per insured life or annuity contract owner; $100,000 in cash surrender value or withdrawal value per insured life or per annuity contract owner; and $100,000 per insured life for health insurance. Need more coverage? Consider dividing insurance coverage between more than one company -- just in case.

Check to see if there have been any complaints against the company. Do an Internet search and check with the state insurance department to make sure it's licensed and has no complaints against it. In Pennsylvania, you can call 1-877-881-6388.

Make certain you have not only a beneficiary, but also a "contingent" beneficiary.

Ask the insurance agent, before your meeting, which companies he or she represents. Consider that your options may be limited accordingly.