Just as the Federal Deposit Insurance Corporation, administered by the Government, covers depositors whose banks fail, the insurance guarantee programs were set up to protect insurance policyholders.

Before the recent creation of bonds backed by loans to insurance policyholders, securities dealers in the last few years have created bonds backed by credit card loans, automobile receivables and computer leases.

The insurance policyholders were not initially named as suspects.

And credit card customers and insurance policyholders give up a certain amount of privacy to the issuers and carriers.

The money - profits that have accumulated for decades - will be shared, according to a complex formula, by the mutual company's 12 million life insurance policyholders, who are its formal owners.

For example, a partner whose primary clients are insurance policyholders would generally be unable to take most of his book of business to a firm that represents insurers.

For losses greater than that, the Treasury secretary would decide whether to impose a special assessment on insurance policyholders or have the costs paid by taxpayers.

The 1995 increase in the base, which finances payouts to insurance policyholders, brought its capital position to $11.4 billion, the most of any life insurer, the company said.

The bill died after opposition by the Democratic majority in the State Assembly, which contended that it would allow the life insurance companies to sell stock without adequately compensating insurance policyholders.

Unfortunately, some claims are denied because the insurance policyholder failed to do something required under the Policy.