Government-sponsored life insurance for military personnel provides coverage far below the American standard, and Congress may decide to remedy the situation because of the Persian Gulf War.
There now is an effort on Capitol Hill to increase the $50,000 death benefit. The Senate Veterans' Affairs Committee recently approved legislation increasing the coverage to $100,000.
In pushing for the change, Sen. John Warner, R-Va., has pointed out that the average American carries $116,000 in life insurance.
"Simple fairness dictates that Americans serving their country in uniform have comparable protection," Warner said.
Nearly all 3.4 million members of the armed forces obtain the $50,000 worth of life insurance through the Office of Servicemen's Group Life Insurance. The policy costs $4 a month.
Run by Prudential Insurance Co., the OSGLI replaced various government insurance programs that have provided life insurance to soldiers, sailors and airmen since World War I.
In 1965 the government decided to turn the job over to a private company and awarded the contract to Prudential, the giant insurance and financial services company based in Newark, N.J.
Military personnel have the option of not taking the insurance, but less than 1 percent say no, according to Charles S. Strang, manager of OSGLI.
The OSGLI is a self-supporting operation during peacetime, but if deaths rise beyond their normal level, the Department of Defense will pay the difference. From 1965 to 1975, the government paid about $500 million in death benefits, according to Paul F. Koons, assistant director for the Department of Veterans Affairs Insurance Programs.
Because military personnel are physically screened when they enter the service and are assured of three meals a day and medical care, "You are in good health when you get there," Koons said, and in peacetime members of the armed forces "have a relatively stable lifestyle."
In 1989, the death rate for the military population, which had an average age of 27, was 0.73 per 1,000. For 27-year-old civilian males, the rate was 1.74 per 1,000, Koons said.
There were 96 U.S. military deaths from August through December during the Persian Gulf buildup, Koons said. Since the war began on Jan. 16, there have been 35 confirmed deaths as of Friday, he said.
Some military personnel, particularly officers, buy additional life insurance from private companies. One large supplier of this coverage is Monumental Life Insurance Co., a Baltimore insurance company owned by the Dutch company AEGON nv.
Monumental has $1.4 billion in coverage on active military personnel and their families, according to James O. C. Gentry, general counsel for Monumental. Despite its large exposure, Monumental is satisfied that claims will remain manageable, according to Henry G. Hagan, senior vice president-chief marketing officer of Monumental.
"We are fairly confident of the capability of the military to be successful in minimizing casualties," he said.
Monumental keeps its active military exposure to less than 10 percent of the company's total life insurance in force, Hagan said. While Monumental has paid no claims as the result of Desert Storm, one of its policyholders has been reported missing in action, a company official said.
One insurer that has more than 10 percent of its coverage with military personnel is USAA, the San Antonio, Texas-based insurance cooperative that caters to officers. An estimated 35 percent of USAA's $40 billion worth of life insurance is sold to active duty and reserve officers.
USAA has received some death claims recently, but declined to say how many. Company officials said it has adequate reserves to cover its large exposure. Bob Flannery, assistant vice president and life products actuary for the USAA Life Insurance Co, said USAA had no financial difficulties during the Vietnam War and has adequate reserves to cover any casualties from the Persian Gulf war.