S Times: Soldiers to pay double for death/injury insurance

#1
Front page of our edition of today's Sunday Times (LINK). (Could equally well go in 'Finance', but it is a news story.)

From The Sunday Times
November 4, 2007
Troops face £1,000 life cover bill
Michael Smith

BRITISH soldiers going to war are to be charged private insurance premiums of up to £1,000 to make up for inadequate government compensation for death or injury.

The effective doubling of premiums is revealed in a leaked Ministry of Defence (MoD) document. The insurance scheme, known as Pax, is run by AIG, the insurance giant, and is officially recommended to soldiers before they go to the battlefield.

In the document, the MoD blames the increase in premiums on the high casualty rate in Afghanistan and Iraq. They say that a surge in payouts has wiped out the scheme’s profits.

The MoD’s own compensation scheme is limited. A soldier who loses the sight of an eye receives only £28,750 from the MoD – but those with full private insurance get £150,000. The MoD pays £115,000 for the loss of a leg or an arm, but those on Pax receive £300,000.

Liam Fox, shadow defence secretary, said the hike in rates represented a breach of the covenant between soldiers and the country: “They are being asked to put their lives at risk, to ask them to pay to do it is an insult.” One lieutenant-colonel, who asked not to be named, said: “Young soldiers on little more than a grand a month after tax are having to buy insurance simply because the compensation that the MoD provides is so inadequate.”
...

A total of 252 servicemen and women have died in Iraq or Afghanistan since 2001 and at least 561 have been wounded in action. Some 47 have suffered the loss or use of limbs or eyes.

Last month the armed forces compensation scheme was revamped after criticism that it was unfair. But in a letter written four days later, on October 15, the MoD effectively admitted that it remained inadequate.

Brigadier J H Gordon, the army’s director of personal services, wrote: “It is a command responsibility to ensure that our officers and soldiers are made aware of the need to provide adequately for their dependants.

“We need to remind our personnel of the various insurance products . . . and of the differences between these schemes and initiatives such as the armed forces compensation scheme.”

Nearly 58,000 members of the armed forces, a third of Britain’s troops, have taken out insurance with Pax.

Gordon warned that soldiers and officers face a double hit. Instead of taking out a policy to cover the six-month period of a typical tour of duty, they will have to pay for a minimum of 12 months. Monthly premiums will also rise by at least 30%.

A single soldier buying the maximum personal accident and life insurance would pay £279 for a six-month deal at present. The 30% increase would take it to nearly £363 for six months, but a minimum 12-month period would increase the cost to £725, a rise of 160%.

The increases would take the maximum payment for soldiers with family plans to £972 a year, Gordon said.

In the letter, he wrote that AIG had suffered “substantial losses . . . owing to the present level of combat injuries and deaths”.

Payouts to troops who had been wounded and to the families of those killed meant that “losses over the past year exceed the cumulative profits [on Pax cover] of the previous 10 years”.

Doug Young, chairman of the British Armed Forces Federation, said: “It’s too much for servicemen and women to have to pay . . . just for the privilege of going on an operational tour.”

The forces compensation scheme was revamped last month to ensure that soldiers with serious disabilities received the maximum payment of £285,000. The MoD acted in the face of public anger at the disclosure that Lance Bombardier Ben Parkinson, who lost both legs when his Land Rover ran over a mine in Afghanistan, was offered just £152,150, little more than half the maximum payout and less than a third of the £484,000 awarded by the courts to an RAF typist who suffered repetitive strain injury to her thumb.

This weekend MoD officials said privately they were negotiating with AIG to drop the 12-month contract. But the 30% increase was seen as inevitable. AIG declined to comment.
"ARRSE-exclusive" comment! - This kind of insurance was a great relief to me and my family one time I found myself heading off at very short notice, and I found myself suddenly uninsurable anywhere else. I kept the cover in force for years after that. But this is a much bigger cost than I ever had to pay and it's too much for servicemen and women to have to pay themselves just for the privilege of going on an operational tour. The increases are also further evidence of the human costs being paid every day in injuries and wounds.

[edited to correct misleading "health insurance" heading which came from my local print edition of The Sunday Times. Mistake by a sub-editor rather than the paper's Defence Correspondent. It should now be clearer what this is about. D.Y.]
 
#2
I think that its a bit of a cheek - not the insurance company - the Govt (and I'm NOT getting political here - it wouldn't matter which Party was in power)!

If a Govt send HMF to any conflict, then they should expect to pick up the tab for deaths and injuries. Personal Insurance should be used to cover other circumstances e.g. RTA, disease etc.
 
#3
Its good to see BAFF taking its head out of its ARRSE to get this "ARRSE-exclusive" comment!" does this mean that BAFF, are now going to look at the way PAX has rip off Vulnerable Veteran's in the past. Or are you still going to sit on the side lines until one of the other Ex Forces Charity's does the foot work.
 
#4
themonsstar said:
Its good to see BAFF taking its head out of its ARRSE to get this "ARRSE-exclusive" comment!" does this mean that BAFF, are now going to look at the way PAX has rip off Vulnerable Veteran's in the past. Or are you still going to sit on the side lines until one of the other Ex Forces Charity's does the foot work.
Hi 'themonsstar'. Presumably a reference to the anonymous "someone" who "requested BAFF help" with an unspecified personal problem and "didnt get it"? The "complaint" was investigated, in so far it it could be having only been stated on 'ARRSE'. BAFF wishes no embarrassment to the anonymous ex-member, who is very welcome to contact me or one of our "troubleshooters" if that would be in any way helpful. Best wishes.
 
#5
hackle said:
themonsstar said:
Its good to see BAFF taking its head out of its ARRSE to get this "ARRSE-exclusive" comment!" does this mean that BAFF, are now going to look at the way PAX has rip off Vulnerable Veteran's in the past. Or are you still going to sit on the side lines until one of the other Ex Forces Charity's does the foot work.
Hi 'themonsstar'. Presumably a reference to the anonymous "someone" who "requested BAFF help" with an unspecified personal problem and "didnt get it"? The "complaint" was investigated, in so far it it could be having only been stated on 'ARRSE'. BAFF wishes no embarrassment to the anonymous ex-member, who is very welcome to contact me or one of our "troubleshooters" if that would be in any way helpful. Best wishes.

Sorry Hackle you have lost me, Are you saying that I'm the anonymous one, because you & I now this is arrse.

Is this how it starts, with you trying to rubbish my name, I've always been up-front about PAX and the way it as treated me. So please donot allude to me being the anonymous one.

And remember I am still a member of BAFF, until my membership runs out.
 
#6
On a bit of a tangent....

This may be the only way REAL casualty figures get an airing. As the MOD are less the forthcoming

Someone records them, pity its only for financial reasons

Is there any ways to access pax/other insurance stats
 
#7
Reading this article today, I thought that it was probably a good idea for soldiers to have this insurance. However, I think it scandelous that the MOD isn't paying all the premiums as part of their responsibility to their employees
 
#8
I've corrected the heading of this thread, which misleadingly referred to "health insurance". This came from my local print edition of the Sunday Times; sub-editor's error, not the journalist's; for anyone not already aware of the PAX product I hope the subject is now clearer.
 
#9
The actual premium rise is 30% or so-I believe Pax have held off raising it for some years, but commercial pressure has forced them into this. The times is being slightly devious-comparing the lowest 6 month rate with the full family cover for a year. They are journos after all. Support the BAFF message fully
 
#10
Skimmed the article but thought it seemed quite well written on first glance. I was mpressed with the 15 comments. Everyone of them supportive of the forces (although that could be down to biased efiting I suppose).
 
#11
devexwarrior. You've missed the point. at present you can take the insurance out for jus the six-months of your tour, proposal is to force people to take it out for a year at a minimum.
 
#12
micksmith said:
devexwarrior. You've missed the point. at present you can take the insurance out for jus the six-months of your tour, proposal is to force people to take it out for a year at a minimum.
Is that really the point micksmith? I am more concerned that it is deemed necessary for service personel to pay their own injury/death insurance for operational deployments. How does that square with "the covenant"?
 
#13
I am waiting for the anonymous MOD spokesperson (someone like "DivisionHeadQuarters") to state something along the lines of:

The Armed Forces Pay Review Body (AFPRB) conducts periodic analysis of pay and conditions for Armed Forces Personell. Their findings are submitted, and in the main, the Government will act positively on these recommendations.

The X Factor is designed to offset the disadvantages of service life and is currently set at 13%. The X factor takes into consideration the increased cost of life insurance to ensure that service personell are not disadvantaged in comparison to their civilian counterpart.
I`m sure something along these lines will surface shortly.

Am I cynical :evil:
 
#15
This is slightly off thread so apologies, but a question.

I have an idea it used to be the case that the estates of members of HM Forces killed in action were free of inheritance tax.

Does anyone know whether that was indeed the case and if it did, does it apply now?

If it does still apply, how is “action” defined?

Finally, it seems a bit rich that whilst anyone can get insurance cover for a specified period of business or holiday travel - a couple of weeks say - HM Forces are likely to be forced to pay for a minimum of a year regardless.
 
#16
Balleh said:
This is slightly off thread so apologies, but a question.

I have an idea it used to be the case that the estates of members of HM Forces killed in action were free of inheritance tax.

Does anyone know whether that was indeed the case and if it did, does it apply now?

If it does still apply, how is “action” defined?

Finally, it seems a bit rich that whilst anyone can get insurance cover for a specified period of business or holiday travel - a couple of weeks say - HM Forces are likely to be forced to pay for a minimum of a year regardless.
Yes, it does still apply, I can post more detail in due course. HM Revenue & Customs have played it quite cagy as to when it applies.
 
#17
AIG are losing money on PAX and are going to up premiums and tie soldiers into longer contracts so they can make some profit. They are a business after all. A lot of serving soldiers will recall the freeze by PAX on taking out new policies with the outbreak of TELIC 1 so this isn't a surprise. At the time AFCS 05 didn't even exist so we've come a little way forward but not far enough. A better angle of attack would be to look at the Service Life Insurance model. The MOD gives a contribution to Stirling Life who offer life insurance at market rates covering war risks. Surely it would be a better move to fund something similar for accident insurance?
 

RMA1

War Hero
#18
Was insured by Pax whilst on a UN job. Unfortunate enough to get injured whilst out there, on sending off claim I was told by this lot my injury happened in "a war like situation" and that "they didn't cover it" also the mil system gave me two fingers as well. Im not surprised they are just another company Screwing the Squaddie.
 
#19
RMA1 said:
Was insured by Pax whilst on a UN job. Unfortunate enough to get injured whilst out there, on sending off claim I was told by this lot my injury happened in "a war like situation" and that "they didn't cover it" also the mil system gave me two fingers as well. Im not surprised they are just another company Screwing the Squaddie.
PM PAXBLOKE and he will investigate your claim
 
#20
hackle said:
Balleh said:
This is slightly off thread so apologies, but a question.

I have an idea it used to be the case that the estates of members of HM Forces killed in action were free of inheritance tax.

Does anyone know whether that was indeed the case and if it did, does it apply now?

If it does still apply, how is “action” defined?

Finally, it seems a bit rich that whilst anyone can get insurance cover for a specified period of business or holiday travel - a couple of weeks say - HM Forces are likely to be forced to pay for a minimum of a year regardless.
Yes, it does still apply, I can post more detail in due course. HM Revenue & Customs have played it quite cagy as to when it applies.
Thanks for that.

Who actually decides whether death has been a result of "action"? Is it the Inland Revenue and Customs, the CoC, the coroner - someone else?

Lastly there used to be a distinction between "action" and "active service", and if I recall correctly this was purely an Inland Revenue measure to maximise tax revenue - estates of those KOAS attracted inheritance tax but those of KIA did not.

I served in Aden and NI - both "active service" - and I could never get my head round this distinction as dead is dead regardless of the deployment.

Edited to add:

Furthermore, is it not also the case that the estates of those murdered are not liable to inheritance tax?

If that is the case, then whichever way one cuts it the estates of any of HM Forces killed as a result of enemy action should be free of inheritance tax regardless.

.
 

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