Armed forces personnel are often exposed to risks which can leave their families and dependants financially vulnerable
While life insurance is a protection that everyone with dependants must have, it is even more pertinent for armed forces personnel to have one, given the nature of their jobs. Whether it is manning remote areas or serving in conflict areas, armed forces personnel face greater risk to life than civilians.
Besides having adequate life insurance, those in the armed forces also need to have some form of disability insurance, as they could face the risk of their steady income getting disrupted due to injury or disability.
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Life Insurance
Life insurance is more expensive for the armed forces personnel compared to other individuals, as they face higher risk. In a lot of cases, insurers may even refuse to provide them with a cover.
Considering all these factors, the government provides them with a cover for which they need to pay the premiums themselves. However, it is important for them to assess if the cover is enough and how they can top it up through other policies. According to experts, the thumb rule for a life insurance cover is to have a sum assured that is equal to or more than 10 times the annual income.
The Army, the Navy and the Indian Air Force provide insurance policies under the Army Group Insurance Fund (AGIF), the Naval Group Insurance Scheme (NGIS) and the Air Force Group Insurance Scheme (AFGIS), respectively. These are return of premium plans.
Officers who leave midway get a term insurance worth Rs 10 lakh from their respective service organisation. Therefore, there is a need to have adequate life insurance depending on individual requirements.
Disability Insurance
Besides life insurance, it is also important to take a disability insurance, as it’s a risk that those in uniform cannot afford to ignore.
Moreover, it’s important to take independent disability insurance as the one that the government provides has some conditions.
“In case of 100 per cent disability, one gets 50 per cent of the death benefit. If the disability is less than 40 per cent, there is no benefit available from the insurance policy provided by the service organisation. Beyond 40 per cent disability, there is a certain percentage,” says Col. Sanjeev Govila (Retd.), who runs the Sebi-registered financial advisory firm, Hum Fauji Initiative.
There could also arise instances when one could get medically boarded out. i.e., forced to leave the armed forces because of medical reasons – injuries or illness – that restrict them from continuing with their military service. This makes taking individual life and disability insurance covers important. The cover provided by the government may fall short once a person leaves the service or retires.
Read the terms and conditions carefully before buying an individual disability insurance.