Outrage as troops forced to pay £1,000 premiums for life insurance - out of their own pocket

Faced with rising death and injury tolls in Iraq and Afghanistan, insurers have nearly trebled some of the premiums they charge.

Servicemen pay for the extra cover under a private scheme that provides for their loved ones if they are killed or wounded.

The Pax scheme, which is approved by the Ministry of Defence, offers payouts up to five times higher than official settlements.

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Single soldiers on a six-month tour of duty are currently charged a premium of around £280.

Now they will have to pay a third more and take out cover for a minimum of 12 months, bringing the total cost to £725. Those with families face a £970 bill.

Critics of the arrangements called on the Ministry of Defence to intervene. Liam Fox, Tory defence spokesman, said: "Our servicemen and women are being asked to put their lives at risk.

"To ask them to pay to do it is an insult."

Nick Harvey, of the LibDems, said the insurance situation was shameful.

He added: "The simplest and most just solution would be for the Government to pay these premiums in full."

More than 250 servicemen and women have lost their lives in Iraq and Afghanistan since 2001 and hundreds more have suffered serious injuries.

Pax, which is tailored for armed forces personnel, is run by AIG, a U.S. insurance giant.

It provides payouts on top of the automatic entitlement under the Armed Forces Compensation Scheme.

A soldier paying the premiums and losing an eye would receive £150,000. The standard MoD payment is £29,000.

A third of all soldiers buy Pax cover, a proportion thought to be higher for units in action abroad.

The increased charges emerged in a leaked memo from Brigadier J H Gordon, the army's director of personal services.

In the document, he stated that AIG had suffered "substantial losses...owing to the present level of combat injuries and deaths".

Most troops buy additional cover for their kit as well, since they have to pay for losses even on operations.

Cover for £5,000 worth of equipment costs almost £270 per year.

Last month, the MoD announced a shake-up of its compensation scheme after the Daily Mail highlighted the case of paratrooper Ben Parkinson.

He lost both his legs and suffered brain damage in a landmine blast in Afghanistan.

Because of the scheme's complex rules he was offered a payout of £152,000 instead of the maximum £285,000.

Ministers have promised more "generous" payments in future.

But last week a badly-wounded teenage soldier, who suffered horrific stomach wounds and a crippled leg and hand, was offered only £57,000.

His injuries were judged insufficiently severe to qualify for the improved payouts.

The Ministry of Defence said it was discussing the level of premiums with Pax.

"If the premiums were increased this would be the first such change since 2003," added a spokesman.

A report claims defence spending must be shifted from hi-tech military hardware towards improving welfare for ordinary personnel.

The Demos think-tank, which is favoured by Labour, claimed the needs of troops were too low on the Government's priorities.

Its study warned that the nation's "covenant" with the armed forces had been "damaged almost beyond repair".