Many Marines don’t explore taking out a Life Insurance policy because they don’t think they will qualify. After all, joining the Armed Forces is a risky occupation with a higher chance of death or serious injury than most civilian jobs. Even if you could get cover, the assumption is that it will be prohibitively expensive and unaffordable for anyone on a basic Royal Marine’s salary.
While it is true that some insurance companies charge additional life insurance premiums because of a Forces occupation; it is possible to find cover that will protect your dependents if the worse happens at an affordable premium.
In my previous blog post I explored some of the common myths surrounding a Death in Service. Myths such as the ‘government will pick up the tab and look after my family’, and ‘my Armed Forces Pension Scheme will pay’. While it is true that some money will be forthcoming from the government, your AFPS and perhaps the Armed Forces Compensation Scheme (AFCS), in most cases it won’t be anywhere near enough to give you peace of mind that your family will be financially secure in the event of your death.
That’s because there are many exceptions and variables that could result in very little financial support, especially long term, and the amount of money your dependents may be entitled to is linked to your salary, years of service and other pay-outs. Typically this means that if you are young with years of service ahead of you, your dependents will be less well off. This is where Life Insurance can make up the shortfall and provide for your family when government grants and pay-outs stop.
3 Facts About Life Insurance For Marines
- Most Marines Need Life Insurance
Not everyone needs life insurance. If you have no dependents and no debts (mortgages, loans, credit cards etc.), or if you know that your AFPS will pay out enough to clear your debts and your partner has an income of their own, then you may not need any further cover.
However for many Forces families, your income is vital to ensure that living expenses are met and that children grow up with some financial security. In which case, life insurance is probably needed to top up any pay-outs from other sources.
To work out whether you need life insurance, consider the following:
- Your total debts (mortgages, credit cards, loans etc.), your family’s monthly expenses (bills, food, entertainment, holiday fund etc.), future needs (school fees and university if applicable and other costs that you might want to cover), and contingency (repairs to property etc.)
- Your funeral costs. The government will provide a Services funeral or a grant of £3,446 towards the cost of a private funeral. On average private funeral costs are closer to £9,000 and you may also need to make provision for legal fees such as for probate costs.
- Death in Service benefits you’re already eligible for. Calculate what your AFSP will pay out (remember this is variable depending on your salary and years of service) and whether your dependents may qualify for a payout through the Armed Forces Compensation Scheme, if your death is attributed to service.
Based on a worst-case scenario, i.e. that pay-outs are minimal, will your dependents have the financial security you want for them? If not, then you will need a life insurance policy.
- Not All Life Insurance Policies Offer The Right Cover
(However many civilian life insurance policies do).
Life insurance varies considerably depending on the product, with some policies only paying out if you die, others providing cover for terminal illness, some paying a lump sum and others providing income for your dependents. Therefore you need to explore the various options to find cover that suits your needs and review it if your circumstances change; for example on the birth of a child, purchase of a house etc.
The same is true for any life insurance policy; whether it is targeted at you as ‘military life insurance’ or if it’s a policy available from your local building society or bank. Remember too that civilians also do jobs that are deemed high risk by insurance providers and policies are available for them too, so many high street providers will cover serving Marines. Therefore you don’t necessarily need a military life insurance policy; you just need one that meets your needs.
When comparing different life insurance products, especially whether to take out a specialist Armed Forces product, consider the term (the length of time the policy runs for) and your future career plans. You could find that if you retire from the Marines because of injury, poor health or for other reasons, your military life insurance policy is cancelled and getting a new policy may be difficult in later life or if you have health issues.
It’s a good idea to get some financial advice, run through the various options and types of policies available to you, and also consider various scenarios. Death in Service is the worst case scenario, one that hopefully your family won’t be faced with, also consider other scenarios and what cover you will need if you’re invalided out or decide to leave full time service.
- The MOD May Refund Additional Insurance Premiums
Certain occupations within the Marines may attract ‘premium loadings’. This is where the insurer increases the premium because your occupation is high risk, for example if you’re a diver. A premium loading may also apply if you want to take out a policy when you are on or due to go on a tour of duty to an active theatre of operations. In this situation you may also find that only certain cover is offered, such as mortgage cover.
The MOD does have a scheme for refunding these premium loadings through the Service Risks Insurance Premium Refunds (SRIPs) scheme (Part 2 Chapter 10, Section 8). While claiming a premium refund is not straightforward, and not everyone is eligible, generally the MOD will refund 90% of any additional premiums for sums assured up to £179,000.
In summary, most Marines with dependents will need to top up the financial support the government provides in the event of a Death in Service with a life insurance policy – if they want the peace of mind that their family will be financially secure long term.
Life insurance policies are available for Marines from high street insurers and specialist providers at affordable premiums. It’s just a question of finding the right product for your circumstances and needs.
The MOD may refund 90% of premium loadings. However, I have found life insurance policies for Special Services personnel without any premium loading from high street providers. Life insurance can be affordable, however risky your occupation.
I’ll be looking at what specific cover is available in a future blog post. In the meantime if you want to discuss any of the above or would like some help with calculating whether you need life insurance or not, please get in touch.
Call 08458 622789 or email [email protected]