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I have never been in the military, but I have never been asked to declare a faith in any school or work context. Why do they ask? I get why they might ask a conscientious objecter, not someone who serves. They have chaplains but shouldn't the soldiers find one that matches their needs?

This could be accomplished in a variety of ways, such as a living will. Don't they send bodies back to determine funeral arrangements? Is "decline to state" an option? I reveal my religion voluntarily (lapsed Catholic and atheist) but I would be offended if anyone demanded to know.

If the worst happens, you want to have the right chaplain show up at the parents/spouse door, different religions have very different concepts of how to handle the body etc... I don't know what policy is on "decline to state", but there is a "No religion" option, which IMO is different than athiest