Service Personnel: Life Insurance (Hansard, 29 January 2003)

§ The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach)
My Lords, the Ministry of Defence makes provision under the Armed Forces Pension Scheme and the equivalent reserves scheme for personnel injured or killed in service. Those wanting additional protection can obtain cover from commercial providers through independent financial advisers or insurance brokers. The MoD also facilitates voluntary, commercially-run schemes—PAX, Forces Safeguard and RPAX—for all personnel. These are still available at present. Nevertheless, the Government are currently examining the options should the necessary cover become unavailable at a reasonable premium.

§ Baroness Gardner of Parkes
My Lords, I thank the noble Lord for that Answer. I declare an interest as an honorary vice-president of the Royal British Legion women's section. Is the Minister aware of the great anxiety this is causing? People who are willing to risk their lives are concerned that those they leave behind may suddenly find themselves homeless because mortgages cannot be met. All kinds of other financial difficulties could arise. As I understand it, the pension scheme to which the Minister refers will give only the equivalent of one year's earnings, whereas many private companies schemes give four times that. Is he also aware that, contrary to what he has said about the Safeguard scheme, I am told that it is not available at present and that it has never covered reservists?

§ Lord Bach
My Lords, the RPAX scheme, which has been in operation for some time, covers reservists. Of course there are concerns about this, and the Government want to do their best to alleviate those concerns. That is why I want to make it clear that personnel who are already insured under the Forces Safeguard and the RPAX schemes, as well as being insured under ordinary commercial schemes, will be covered. That is the crucial message that we need to get across this afternoon.

§ Baroness Trumpington
My Lords, is the Minister aware of the recent letter in The Times from a consultant surgeon who is also a reservist, worrying about the fact that there is no cover, from his point of view? Is the Minister worried that there will be a shortage of medical personnel if it is true that they will not be covered without a limit of finality on their service abroad?

§ Lord Bach
My Lords, I am aware of the letter that appeared in The Times yesterday. I have already accepted that there is concern about the issue. I can only repeat that the Armed Forces Pension Scheme and the equivalent reserves scheme are available and that those wanting additional protection can still get it from commercial providers. Those who already have additional protection are covered.

§ Lord Redesdale
My Lords, will there be an increase in the death-in-service benefit from one and a half times to four times, and when could we expect such provision to be made? If there is an excess premium for 1131 reservists who are caught out if they are called up unexpectedly, will the Government meet those excess premiums?

§ Lord Bach
My Lords, on the first part of the noble Lord's question, it is a little too simple to suggest that the death-in-service benefit under the existing Armed Forces Pension Scheme is as limited as the noble Lord suggests. There is a one-off lump sum payment with a subsequent pension. For death on active service, both are tax free and are calculated according to factors such as number of dependants and length of service. We are looking at how we can improve this package, but it will take some time before we can complete our consideration and do so.

§ Lord Vivian
My Lords, what guidance is given on life and disability insurance matters when reservists report to mobilisation centres? What guidance is given to regular personnel when enlisting into the Armed Forces? Will the Minister comment on the fact that, as I understand it, Safeguard has said that it is excluding war cover with effect from 7th February?

§ Lord Bach
My Lords, as far as Safeguard is concerned, I believe that a meeting is to be held tomorrow to see whether what appeared in The Times yesterday will happen. The noble Lord asks what we do to inform personnel, especially reservists, about insurance matters when they join up. Some providers—and I think this is the basis of his question—have withdrawn schemes for new members under order to deploy. Existing policyholders are on unchanged risk until their policy expires. Internal communications briefings steer individuals to the services' insurance and investment advisory panel. We assist service personnel in getting independent financial advice by publishing a list of 35 independent financial advisers and brokers who have knowledge of the services.

§ Baroness Strange
My Lords, will the Minister confirm that on the death of any reservist in this conflict, which we hope will not be, his widow would count as a war widow?

§ Lord Bach
My Lords, I can confirm that because, as I said in answer to the original Question, the equivalent attributable reserves scheme—the equivalent of the Armed Forces Pension Scheme, which the noble Baroness, Lady Strange, knows very well— will apply for personnel injured or killed in service.

§ Baroness Gardner of Parkes
My Lords, is the Minister aware that in another place, the Secretary of State for Defence said that these insurance companies were still offering cover, whereas the Minister seems to have admitted today that a number of well known insurers are not? Is not the great dividing line between those who already have policies, whom we know are covered, and those who are now applying? Is he willing to admit that people are being refused policies now?

§ Lord Bach
My Lords, there is no difference between what I am saying and what my right honourable friend 1132 the Secretary of State said on Monday in another place. He quoted directly from the website press release of the Association of British Insurers. It produced a press release on Saturday 25th January, which, of course, was the date on which this story appeared for the first time in The Times. He quoted the press release as saying that, existing life insurance policies held by members of the armed forces would be unaffected by any call-up or deployment in the Gulf". It also said: Existing life insurance policies will continue in force if the policyholder is on standby or deployed on active service". In addition, the press release said that, armed forces personnel are encouraged to recognise the long-term nature of life insurance at all times and not just at times of more active service".