Under a Ministry of Defence (MOD) scheme, 300,000 personnel in the armed forces are being offered life assurance. Before this scheme the forces found it difficult and expensive to get insurance because of the dangerous nature of their jobs.
This new scheme will provide cheap life insurance offered by Sterling Life, any major losses are to be underwritten by the government. Service Life Insurance (SLI) will be available immediately to regular and reservist personnel.

The SLI cover is being offered regardless of the likelihood of the person seeking a policy being involved in combat. It will not cost extra for service men and women who are at greatest risk of facing combat situations, however smokers will be penalised, facing more costly premiums.

The premiums will be paid in the same way as everyday life insurance cover, premiums will be priced from £5 per month upwards and terminal illness cover is included as with many standard insurance policies. The maximum life cover is being set at £200,000.

Managing director of Sterling Life, John Blundell said: "The premium levels will be in line with those enjoyed by the civilian population." The life cover is guaranteed for up to 25 years, previously to this scheme insurers would either refuse life cover for service personnel or hike up premiums or only insure with big get-out clauses.

Personnel who are already on duty in Iraq and Afghanistan will also be offered the opportunity to join this scheme.

Between 10,000 and 15,000 armed forces personnel are expected to take out policies during the first year of the scheme. Alan Ingram, armed forces minister said: "It gives our personnel the option to take out life insurance cover that is tailor-made to reflect the unique nature of what they do.

"Cover is available to each and every serviceman or woman across every unit, ship and regiment at every stage of their career."

Until this scheme, if personnel were killed on duty their family would only have the MOD's compensation scheme to rely upon, due to the high prices of life insurance policies for the forces only a handful possessed life insurance policies. This meant that if the worst happened the family left behind could be left in financial trouble, supported only by a minimal MOD pay-out.

Recently there have been complaints from families of service personnel who have been killed during active service, about the small amounts of compensation paid and bureaucratic problems with receiving back dated pay. In 2005 this resulted in the government increasing its death in service payouts for armed forces.

Ingram said of the policy: "The Service Life Insurance is a voluntary scheme designed to complement and reinforce what we already provide, to give personnel the independent option to take out life insurance cover that is tailor-made; that reflects the unique nature of what they do; cover that is available to each and every serviceman or woman across every unit, ship or regiment at every stage of their career, whatever their job, wherever they are; an insurance scheme without war or terrorism exclusions."

This life insurance policy is so unique because it covers worldwide war and terrorism risks, it does not require medical examinations or lengthy application forms, does not load premiums for people in certain trades or engaging in service-recognised hazardous sports.

To be eligible for this policy you must be a member of the reserves forces and be aged between 18 and 55 when taking out the policy. Benefits include automatic acceptance, no war or terrorism exclusion when on duty, immediate cover from when the application form is received.