It has emerged that British soldiers fighting overseas are being forced to pay as mush as £1,000 for life insurance cover as a result of the rising number of death’s and injuries being suffered by the armed forces during conflicts in places such as Iraq and Afghanistan.

Insurers have nearly trebled the amount they charge servicemen and women for premiums, who pay for the extra cover under a private scheme that will provide for their families if they are killed or wounded in action. This pay scheme, approved by the Ministry of Defence (MOD) offers payouts of up to five times more than official settlements.

Soldiers whose marital status is single were asked to pay £280 for their policy which covers a six month tour of duty. Now however, they will have to pay a third more and take out cover for a minimum of 12 months, taking the total cost to £725. Married troops with families are faced with a bill of around £970 for a 12 month tour of duty.

Conservative Member of Parliament, Liam Fox called on the Ministry of Defence to intervene, he 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, Member of Parliament representing the Liberal Democrats announced the situation as shameful, he said, “The simplest and most just solution would be for the Government to pay these premiums in full.”

The number of British casualties who have lost their lives in the conflicts in Iraq and Afghanistan has continued to grow through the hundreds since coalition armed forces arrived in the region in 2001, with hundreds more suffering serious injury.

US insurance giant AIG runs a customized insurance policy for soldiers called Pax which provides settlements on top of the automatic entitlement under the Armed Forces Compensation Scheme. Personnel who pay for this type of premium will typically receive around £150,000 if they were to lose an eye in action for example. The Ministry of Defence’s standard payout is around £29,000.

It has been revealed that a third of all soldiers use Pax cover, with a higher share thought to be used by divisions fighting overseas.

The increase in charges for troops came to light through a leaked memo from the army’s director of personal services, Brigadier J H Gordon. In the report the Brigadier alleged that ‘substantial losses’ had been experienced by AIG, ‘owing to the present level of combat injuries and deaths’.

The Ministry of Defence announced a reform of its compensation scheme following a paratrooper losing both of his legs and suffering brain damage in a landmine blast in Afghanistan. Under their complex scheme he was offered a settlement of £152,000 instead of the maximum £285,000. Ministers promised more ‘generous’ payments.

However since the announcement, a teenage soldier who was left with horrific stomach wounds and a cripple leg and hand, was offered just £57,000.

A Ministry of Defence spokesman revealed they were discussing the level of premiums with Pax, saying, “If the premiums were increased this would be the first such change since 2003.”

The Demos think tank, favoured by the Labour party, claimed the needs of soldiers were low on the Governments priorities. They warned that the nations ‘covenant’ with the armed forces had been ‘damaged almost beyond repair’.