WASHINGTON — William Beale and his wife, Elvera, went on a vacation in early April to the Grand Canyon and returned to discover their financial future suddenly shaky, as they found themselves among those caught up in the failure of Executive Life Insurance Co.

The couple are supposed to receive $22,000 from a retirement annuity coming due in November. But Beale, a 74-year-old resident of Leisure World in Seal Beach, says: "I haven't the slightest idea what will happen. We've been told all along you never miss with insurance."

They are not alone. Misplaced confidence in the sanctity of an insurance company has ensnared thousands of unwitting casualties. People such as the Beales bought individual policies for an economically secure old age.

On April 11, California regulators seized Executive Life in the largest failure of a life insurer in history. A sister firm, Executive Life of New York, also has been placed in conservatorship by regulators there. And this week the insurers' parent company, First Executive Corp., sought protection from creditors by filing for Chapter 11 bankruptcy.

In the aftermath, retirement payments to thousands of workers who never heard of Executive Life have been slashed by 30% beginning this month. After taking control of the company, California Insurance Commissioner John Garamendi ordered Executive Life to cut all annuity payments--including those bought by companies after terminating pension plans--to conserve the insurer's inadequate funds.

The ripple effects from the Executive Life failures--and subsequent seizures of the insurance units of First Capital Holdings Co.--threaten to create a crisis of confidence for the insurance industry, which depends on the faith of the public to market its products, and for the corporations that turned to Executive to handle their pensions.

It's not an isolated problem. The potential victims are in all 50 states and the District of Columbia, notes Sen. Richard Bryan (D-Nev.), who directed a recent Senate Commerce Committee hearing on the insurance industry problems. Executive Life of California alone has 170,000 life insurance policies and 75,000 retirement annuities with a value of $45 billion.

Many find themselves in a sort of financial limbo because their employers--an impressive roster that includes Revlon, RJR Nabisco, Merritt Peralta Hospital Center in Oakland, Smith International Inc. and Bulova Watch Co.--swapped their pension plans for Executive Life annuities.