Life Insurance for Military Families UK
Serving in the UK Armed Forces is a commitment unlike any other, demanding courage, dedication, and significant personal sacrifice. For the families supporting our service personnel, this commitment brings a unique set of challenges and uncertainties. While the MOD provides a safety net, ensuring your family's long-term financial security requires careful, independent planning.
This guide is designed to navigate the complexities of personal protection insurance for military families. We will explore the different types of cover available, explain the nuances of applying while serving, and provide actionable advice to help you secure the robust financial protection your loved ones deserve.
Comprehensive policies to protect armed forces families
For members of the Army, Royal Navy, and Royal Air Force, a standard, off-the-shelf life insurance policy often falls short. Mainstream insurers can be wary of the risks associated with a military career, from hazardous training exercises to active deployment in conflict zones. This can lead to outright application rejections, prohibitively expensive premiums, or policies riddled with exclusions that render them useless when they are needed most.
This is where specialist life insurance comes in. A number of forward-thinking UK insurers have developed policies specifically designed for the needs of armed forces personnel. These policies are built with an understanding of military life. They typically offer worldwide cover and do not include the "act of war" or "hazardous activity" exclusions that are common in standard civilian plans.
Securing the right policy is about more than just a payout; it's about providing peace of mind. It’s the reassurance that, should the worst happen, your mortgage will be paid, your children’s future will be provided for, and your family can grieve without the added burden of financial crisis.
Understanding the Armed Forces Compensation Scheme (AFCS)
Before diving into private insurance, it's essential to understand the state-backed provisions you are already entitled to. The Armed Forces Compensation Scheme (AFCS) and the associated death-in-service benefits provide a foundational level of support.
The AFCS provides compensation for any injury, illness, or death caused by service on or after 6 April 2005.
Death-in-Service Benefits:
If a member of the armed forces dies in service, their eligible partner and children will typically receive:
- A Tax-Free Lump Sum: This is usually a multiple of your annual salary. For those in the Armed Forces Pension Scheme 2015 (AFPS 15), this is typically four times your final pensionable earnings.
- A Survivor's Pension: An ongoing, taxable income is paid to your eligible spouse, civil partner, or long-term partner, as well as dependent children.
Here is a simplified overview of what the AFPS 15 scheme might provide:
| Benefit Type | Recipient | Typical Amount |
|---|---|---|
| Death-in-Service Lump Sum | Nominated Beneficiary | 4 x Final Pensionable Earnings |
| Adult Survivor's Pension | Spouse/Civil Partner | 62.5% of the member's pension |
| Child's Pension | Dependent Child | Varies (e.g., 25% of member's pension per child) |
Note: These figures are illustrative. The exact amounts depend on the specific pension scheme (e.g., AFPS 75, 05, or 15) and individual circumstances.
Why the AFCS is Often Not Enough
While these benefits are substantial and provide a crucial safety net, relying on them alone can leave significant financial gaps. Consider a typical scenario:
Example: The Smith Family
- Sergeant Smith: Age 32, on a salary of £40,000.
- Partner & Two Children: Ages 5 and 7.
- Family Home: £200,000 remaining on the mortgage.
- Monthly Outgoings: £2,500 (mortgage, bills, food, etc.).
If Sergeant Smith were to die in service, his family might receive:
- Lump Sum: 4 x £40,000 = £160,000.
- Survivor's Pension: A percentage of his accrued pension.
The £160,000 lump sum would not be enough to clear the £200,000 mortgage, immediately leaving a £40,000 shortfall. Furthermore, the survivor's pension, while helpful, is unlikely to match his full salary, meaning the family would have to adjust to a lower standard of living at the most difficult time imaginable. This is precisely the gap that private life insurance is designed to fill.
Why Military Personnel Need Specialist Life Insurance
The unique nature of military service creates specific risks and financial planning needs that go beyond the scope of both standard insurance policies and MOD benefits.
- High-Risk Occupation: The fundamental duties of an armed forces member, even during training, are inherently more dangerous than most civilian jobs. Specialist insurers understand and price for this risk, whereas standard insurers may simply decline cover.
- Travel & Deployment: Service personnel are frequently deployed overseas, sometimes to regions considered high-risk. A standard policy may become invalid if you travel to a country the Foreign, Commonwealth & Development Office (FCDO) advises against visiting. Specialist military policies provide worldwide cover.
- 'Act of War' Exclusion: Many civilian life insurance policies contain clauses that exclude claims resulting from acts of war, terrorism, or civil unrest. For a serving soldier, sailor, or aviator, this exclusion makes the policy fundamentally unsuitable. Specialist policies remove this exclusion.
- Covering Large Debts: The primary goal for many families is to ensure their largest debt—the mortgage—is paid off. A decreasing term life insurance policy can be set up to clear the outstanding balance, ensuring your family keeps their home.
- Providing a Family Income: Beyond the mortgage, families need money for daily life. A Family Income Benefit policy can provide a tax-free monthly income to replace your salary, ensuring bills are paid and children's needs are met until they are financially independent.
- Protecting Your Health and Income: What if you don't die but suffer a serious injury or illness that ends your military career? Critical Illness Cover and Income Protection are designed for this eventuality, providing financial support while you recover and adapt.
Types of Protection Insurance for Armed Forces Families
Choosing the right type of insurance depends entirely on your personal circumstances, financial commitments, and what you want to protect. Here's a breakdown of the most relevant options.
Life Insurance
This is the cornerstone of financial protection. It pays out a cash sum if you die during the policy term.
- Level Term Insurance: You choose a lump sum amount (the 'sum assured') and a policy length (the 'term'). This amount remains fixed throughout the term. It is ideal for providing a general financial cushion for your family and covering interest-only mortgages.
- Decreasing Term Insurance: The sum assured decreases over the term of the policy, broadly in line with the way a repayment mortgage reduces. Because the potential payout reduces over time, these policies are cheaper than level term cover. They are perfect for covering a repayment mortgage.
- Family Income Benefit (FIB): Instead of a single lump sum, FIB pays out a regular, tax-free income from the point of claim until the end of the policy term. This is an excellent, budget-friendly option for young families, as it directly replaces a lost salary to cover ongoing costs.
Comparing Term Life Insurance Options
| Feature | Level Term Insurance | Decreasing Term Insurance | Family Income Benefit |
|---|---|---|---|
| Payout | Fixed lump sum | Decreasing lump sum | Regular monthly income |
| Primary Use | Family protection, interest-only mortgage | Repayment mortgage | Replacing lost salary |
| Cost | Medium | Low | Low |
| Best For | Providing a significant inheritance | Clearing a specific large debt | Young families on a budget |
Critical Illness Cover
This type of policy pays out a tax-free lump sum if you are diagnosed with one of a list of specific, serious illnesses or medical conditions. It is often sold combined with life insurance. For military personnel, the risks of career-ending illness or injury are heightened.
Why it's vital for military families:
- An accident in training or an illness could lead to a medical discharge.
- The lump sum can be used to adapt your home, cover private medical costs, or clear debts, reducing financial pressure during recovery.
- It provides a financial buffer while you transition to a new civilian career.
Standard policies cover dozens of conditions, including most types of cancer, heart attack, stroke, and multiple sclerosis. It is crucial to check the policy wording to see exactly what is covered.
Income Protection
Often considered the most important policy of all, Income Protection pays a regular monthly income if you are unable to work due to any illness or injury.
- How it works: It replaces up to 60-70% of your gross salary. You choose a 'deferral period' (e.g., 3, 6, or 12 months), which is the time you wait after stopping work before the payments begin. The longer the deferral period, the lower the premium.
- Why it's important: While the MOD provides sick pay, it may not last indefinitely. If you are medically discharged, your military income stops. An Income Protection policy can provide a salary until you recover, retrain, or reach retirement age, protecting your family's lifestyle.
Working with an expert adviser like WeCovr can be invaluable here. We can help you compare specialist policies from across the market to find the one that offers the most comprehensive definitions and the best value for your specific military role.
The Application Process: What to Expect
Applying for life insurance as a serving member of the armed forces involves more detail than a civilian application. Insurers need a clear picture of your role and the associated risks.
Honesty is the Best Policy
The golden rule of any insurance application is to be completely honest and transparent. Failing to disclose relevant information (non-disclosure) can give the insurer grounds to void your policy and refuse to pay a claim, leaving your family with nothing.
You must be upfront about:
- Your specific role and trade: A chef in a UK-based barracks has a very different risk profile to a Royal Marines Commando or a bomb disposal expert.
- Your current status: Are you a regular, reservist, or in the process of leaving?
- Deployment: Have you been deployed in the last few years? Do you have any deployments scheduled? You must declare the location, nature, and duration of your duties.
- Hazardous activities: This includes both military duties (e.g., parachuting, diving, handling explosives) and civilian hobbies (e.g., motorsports, rock climbing).
- Health and lifestyle: Standard questions about your height, weight, smoking status, alcohol consumption, and medical history.
Medical Examinations
For larger sums assured or if you have pre-existing health conditions, the insurer may request a medical examination, a report from your GP, or for you to complete a more detailed health questionnaire. This is a standard part of the underwriting process.
Navigating this can feel daunting, but a specialist broker can guide you. They know which insurers have a more favourable view of military service and can help you present your application in the best possible light.
Common Challenges and How to Overcome Them
Securing the right cover isn't always straightforward. Here are some common hurdles and how to clear them.
| Challenge | The Problem | The Solution |
|---|---|---|
| Finding an Insurer | Many mainstream insurers simply won't offer cover to active service personnel due to the perceived risk. | Use a specialist insurance broker like WeCovr. We work with insurers who understand and actively cater to the armed forces market. |
| Higher Premiums | The increased risk associated with some military roles can lead to higher monthly premiums compared to a civilian counterpart. | While some increase is unavoidable, you can manage costs by quitting smoking, maintaining a healthy weight, and comparing quotes from multiple specialist providers to ensure you get the best value. |
| Deployment Clauses | Some policies may restrict or invalidate cover while you are deployed to certain parts of the world. | Seek out a policy that offers genuine 'active service' cover. This means you are protected 24/7, anywhere in the world, regardless of your deployment status. This is a non-negotiable feature. |
| Cover for Spouses | The focus is often on the serving member, but the financial contribution of the non-serving partner (including as a homemaker) is immense and needs protecting. | Ensure your partner also has adequate life and critical illness cover. You can choose between two single policies or a joint life policy. Single policies offer more comprehensive cover as they pay out independently. |
Life Insurance for Veterans and Reservists
Your insurance needs change as your service status changes.
Veterans
Once you leave the military, your risk profile changes significantly. In most cases, you will be able to access standard life insurance policies at civilian rates.
- Action: Review your existing military policy. You may be able to switch to a new policy with a mainstream insurer for a much lower premium.
- Important: You must still declare any service-related health conditions or injuries on your application.
Reservists
Members of the Army Reserve, Royal Naval Reserve, Royal Marines Reserve, or RAF Reserves need to be clear with insurers about their commitment.
- Declaration: You must declare your reservist duties, including your role, training commitments, and any likelihood of mobilisation.
- Cover Options: Some insurers will offer standard terms but may place an exclusion on claims that arise while you are mobilised for active service. A better option is to seek a specialist policy that covers you during these periods, ensuring there are no gaps in your protection.
Financial Planning for Military Directors and Business Owners
A growing number of service leavers and even serving personnel are becoming entrepreneurs and company directors. This brings a different set of financial protection needs.
- Key Person Insurance: If you are a key individual within a business, your death or critical illness could have a devastating financial impact on the company. Key Person Insurance is a policy taken out by the business on your life. The payout goes to the business to help cover lost profits, recruit a replacement, or clear business debts.
- Executive Income Protection: This is a form of income protection that is paid for by your limited company as a legitimate business expense. If you, as a director, are unable to work due to illness or injury, the policy pays a monthly income to the company, which can then be distributed to you. It is a highly tax-efficient way of protecting your personal income.
- Gift Inter Vivos Insurance: For high-net-worth personnel planning their estate, this is a specialist policy. If you gift a significant asset (e.g., property or cash) to a loved one to reduce your Inheritance Tax (IHT) liability, that gift is only fully IHT-free if you survive for seven years. This policy provides a lump sum to cover the potential IHT bill if you die within that seven-year window.
Top Tips for Securing the Best Military Life Insurance
- Start Early: The younger and healthier you are when you apply, the lower your premiums will be for the entire life of the policy. Don't put it off.
- Use a Specialist Broker: This is the single most effective tip. An independent broker specialising in military insurance, like us here at WeCovr, doesn't just sell one company's products. We compare plans from all the key UK insurers to find you the most suitable cover at the most competitive price, saving you time and money.
- Be Honest and Accurate: Withholding information is a false economy. Full disclosure ensures that your policy is valid and will pay out when your family needs it.
- Review Your Cover Regularly: Life doesn't stand still. Get married? Have a child? Get a promotion? Pay off your mortgage? Leave the service? These are all key moments to review your cover to ensure it still meets your needs.
- Focus on Your Health & Lifestyle: Taking steps to improve your health can have a direct impact on your premiums. Quitting smoking is the biggest factor, but reducing alcohol intake and maintaining a healthy BMI can also lead to significant savings. At WeCovr, we go a step further by providing our customers with complimentary access to our AI-powered calorie tracking app, CalorieHero, to support their health and wellness journey.
- Don't Rely Solely on the AFCS: View your MOD benefits as the foundation. Private insurance is the structure you build on top to create a fortress of financial security for your family.
In conclusion, protecting your family's future is one of the most important responsibilities you have. For members of the UK Armed Forces, the path to securing that protection has unique challenges, but with the right knowledge and expert guidance, it is entirely achievable. By understanding the limitations of the AFCS and exploring specialist life, critical illness, and income protection policies, you can create a comprehensive safety net that provides true peace of mind.
Do I need to tell my life insurance provider if I am deployed?
Will my life insurance pay out if I die in a conflict?
Are premiums for military life insurance much more expensive?
What happens to my policy when I leave the military?
Can my spouse get life insurance?
Is Critical Illness Cover worth it for armed forces personnel?
Why life insurance and how does it work?
What is Life Insurance?
Life insurance is an insurance policy that can provide financial support for your loved ones when you or your joint policy holder passes away. It can help clear any outstanding debts, such as a mortgage, and cover your family's living and other expenses such costs of education, so your family can continue to pay bills and living expenses. In addition to life insurance, insurance providers offer related products such as income protection and critical illness, which we will touch upon below.How does it work?
Life insurance pays out if you die. The payout can be in the form of a lump sum payment or can be paid as a replacement for a regular income. It's your decision how much cover you'd like to take based on your financial resources and how much you'd like to leave to your family to help them deal with any outstanding debts and living expenses. Your premium depends on a number of factors, including your occupation, health and other criteria.The payout amount can change over time or can be fixed. A level term or whole of life policy offers a fixed payout. A decreasing term policy offers a payout that decreases over the term of the cover.
With critical illness policies, a payout is made if you’re diagnosed with a terminal illness with a remaining life expectancy of less than 12 months. While income protection policies ensure you can continue to meet your financial commitments if you are forced to take an extended break from work. If you can’t work because you’ve had an accident, fallen sick, or lost your job through no fault of your own, income protection insurance pays you an agreed portion of your salary each month.
Income protection is particularly helpful for people in dangerous occupations who want to be sure their mortgage will always be covered. Income protection only covers events beyond your control: you’re much less likely to be covered if you’re fired from your job or if you injure yourself deliberately.
Questions to ask yourself regarding life insurance
Just ask yourself:👉 Who would pay your mortgage or rent if you were to pass away or fall seriously ill?
👉 Who would pay for your family’s food, clothing, study fees or lifestyle?
👉 Who would provide for the costs of your funeral or clear your debts?
👉 Who would pay for your costs if you're unable to work due to serious illness or disability?
Many families don’t realise that life, income protection and critical illness insurance is one of the most effective ways to protect their finances. A great insurance policy can cover costs, protect a family from inheriting debts and even pay off a mortgage.
Many would think that the costs for all the benefits provided by life insurance, income protection insurance or critical illness insurance are too high, but the great news is in the current market policies are actually very inexpensive.
Benefits offered by income protection, life and critical illness insurance
Life insurance, income protection and critical illness insurance are indispensable for every family because a child loses a parent every 22 minutes in the UK, while every single day tragically 60 people suffer major injuries on the UK roads. Some people become unable to work because of sickness or disability.Life insurance cover pays out a lump sum to your family, loved ones or whomever you choose to get the money. This can be used to secure the financial future of your loved ones meaning they would not have to struggle financially in the event of your death.
If it's a critical illness cover, the payout happens sooner - upon diagnosis of a serious illness, disability or medical condition, easing the financial hardship such an event inevitably brings.
Income protection insurance can be very important for anyone who relies on a pay check to cover their living costs, but it's especially important if you’re self-employed or own a small business, where your employment and income is a bit less stable. It pays a regular income if you can't work because of sickness or disability and continues until you return to paid work or you retire.
In a world where 1 in 4 of us would struggle financially after just four weeks without work, the stark reality hits hard – a mere 7% of UK adults possess the vital shield of income protection. The urgency of safeguarding our financial well-being has never been more palpable.
Let's face it – relying on savings isn't a solution for everyone. Almost 25% of people have no savings at all, and a whopping 50% have £1,000 or less tucked away. Even more concerning, 51% of Brits – that's a huge 27 million people – wouldn't last more than one month living off their savings. That's a 10% increase from 2022.
And don't even think about state benefits being a safety net. The maximum you can expect from statutory sick pay is a mere £109.40 per week for up to 28 weeks. Not exactly a financial lifeline, right?
Now, let's tackle a common objection: "But I have critical illness insurance. I don't need income protection too." Here's the deal – the two policies apply to very different situations. In a nutshell:
- Critical illness insurance pays a single lump sum if you're diagnosed with or undergo surgery for a specified potentially life-threatening illness. It's great for handling big one-off expenses or debts.
- Income protection, on the other hand, pays a percentage of your salary as a regular payment if you can't work due to illness or injury. It's the superhero that tackles those relentless monthly bills.
Types of life insurance policies
Common reasons for getting a life insurance policy are to:✅ Leave behind an amount of money to keep your family comfortable
✅ Protect the family home and pay off the mortgage in full or in part
✅ Pay for funeral costs
Starting from as little as a couple of pounds per week, you can do all that with a Life Policy.
Level Term Life Insurance
One of the simplest forms of life insurance, level term life insurance works by selecting a length of time for which you would want to be covered and then deciding how much you would like your loved ones to receive should the worst happen. Should your life insurance policy pay out to your family, it would be in a lump sum amount that can be used in whatever way the beneficiary may wish.
Decreasing Term Life Insurance
Decreasing term life insurance works in the same way as level term, except the lump sum payment amount upon death decreases with time. The common use for decreasing term life cover is to protect against mortgage repayment as the lump sum decreases along with the principal of the mortgage itself.
Increasing Term Life Insurance
Increasing term life insurance aims to pay out a cash sum growing each year if the worst happens while covered by the policy. With increasing term life cover amount insured increases annually by a fixed amount for the length of the policy. This can protect your policy's value against inflation, which could be advantageous if you’re looking to maintain your loved ones’ living standards, continue paying off your mortgage in line with its repayment schedule and cover your children’s education fees.
Whole of Life Insurance
Whereas term life insurance policies only pay out if you pass away during their term, whole of life insurance pays out to your beneficiaries whenever this should happen. The most common uses for whole life insurance are to cover the costs of a funeral or as a vehicle for your family's inheritance tax planning.
Family Income Benefit
Family income benefit is a somewhat lesser-known product in the family of life insurance products. Paying out a set amount every month of year to your beneficiaries, it is the most cost-effective way of maintaining your family's living standards to an age where you'd expect them to be able to support themselves financially. The most common use would be for a family with children who are not working yet so are unable to take care of themselves financially.
Relevant Life Insurance
Relevant Life Insurance is a tax-efficient policy for a director or single employee. A simple level term life insurance product, it is placed in a specific trust to ensure its tax efficiency. The premiums are tax deductible and any benefit payable should a claim arise is also paid out tax free, which makes it an attractive product for entrepreneurs and their businesses.
Important Fact!
We can look at a more suitable option mid-term!
Why is it important to get life insurance early?
👉 Many people are very thankful that they had their life, income protection, and critical illness insurance cover in place before running into some serious issues. Critical illness and income protection insurance is as important as life insurance for protecting your family's finances.👉 We insure our cars, houses, bicycles and even bags! Yet our life and health are the most precious things we have.
Easily one of the most important insurance purchases an individual or family can make in their lifetime, the decision to buy life, income protection, critical illness and private medical health insurance can be made much simpler with the help of FCA-authorised advisers. They are the specialists who do the searching and analysis helping people choose between various types of life insurance policies available in the market, including income protection, critical illness and other types of policies most suitable to the client's individual circumstances.
It certainly won't do any harm if you speak with one of our experienced FCA-authorised insurance partner experts who are passionate about advising people on financial matters related to life insurance and are keen to provide you with a free consultation.
You can discuss with them in detail what affordable life, income protection, critical illness or private medical health insurance plan for the necessary peace of mind they would recommend! WeCovr works with some of the best advisers in the market.
By tapping the button below, you can book a free call with them in less than 30 seconds right now:
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WeCovr is an insurance specialist for people valuing their peace of mind and a great service.👍 WeCovr will help you get your private medical insurance, life insurance, critical illness insurance and others in no time thanks to our wonderful super-friendly experts ready to assist you every step of the way.
Just a quick and simple form and an easy conversation with one of our experts and your valuable insurance policy is in place for that needed peace of mind!