Until now, they had found it difficult and costly to get insurance, because insurers feared the costs of high casualties from a major war.

The Service Life Insurance (SLI) will be offered by insurer Sterling Life, but major losses will be underwritten by the government.

SLI will be available to regular and reservist personnel.

Smoker premium

SLI cover will be available irrespective of the likelihood of the person insured being involved in combat.

Personnel at greatest risk of combat will not be asked to pay extra.

However, there will be different premiums for smokers and . Smokers pay more.

Service personnel will pay a premium in the same way as everyday life insurance cover.

Premiums will start from 5 per month and, as with many standard insurance policies, terminal illness cover is also included.

Maximum life cover will be set at 200,000.

John Blundell, managing director of Sterling Life, said: “The premium levels will be in line with those enjoyed by the civilian population.”

He added that life cover was guaranteed for up to 25 years.

Previously, insurers would refuse to provide life cover, hike up premiums or only insure with big get-out clauses.

Personnel currently on active duty in Afghanistan and Iraq will be offered a chance to join the scheme.

‘Tailor-made’ cover

It is expected that during the first year of the scheme, between 10,000 and 15,000 armed forces personnel will take out policies.

Armed Forces Minister Alan Ingram said: “It gives our personnel the option to take out life insurance cover that is 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.”

Up until now, if personnel had been killed on duty, their family would have to rely solely on the MOD’s in-house compensation scheme.

In the recent past, there have been complaints from the families of service personnel about the level of compensation being paid and problems over backdated pay.

In 2005, the government significantly increased its death-in-service payouts for members of the armed forces.

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