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Genetic testing could create complications in the life insurance industry

Life Insurance and Annuities
by Mark Birdsall
Genetic testing could create complications in the life insurance industry
Genetic testing could create complications in the life insurance industry

The cost of genetic testing has dropped exponentially in the last decade, and more and more of the public are taking advantage of the affordable testing.  As genetic tests become more prevalent, the life insurance industry has had to respond to this new source of health information, and consumers aren't always happy with the industry's current approach.

While no U.S. life insurance company has yet required genetic testing as part of their application process, some companies are asking applicants if genetic tests have been previously performed.  The results of such tests are considered in the underwriting process and can affect the eligibility of the applicant.  For example, at least one life insurance company is denying coverage if the applicant has tested positive for a mutation called the BRCA 1 gene, according to a report by Fast Company.  This gene is associated with a 55% to 65% chance of developing breast cancer before age 70, compared to 12% in the general population.

With genetic testing only now becoming common, the life insurance industry has a long way to go before the implications of test results can be confidently incorporated into the underwriting process.  Companies that deny coverage to applicants with high-risk genes such as the BRCA 1 gene are ignoring the preventative measures that such applicants are likely to take once they know they are at risk. 

"Those who find out they have the [BRCA 1] mutation can drastically reduce their risk," Laura Esserman, a surgeon and breast cancer oncology specialist at the University of California, San Francisco, told the site. "Knowledge is power."

Genetic testing could be a boon to consumers in some ways, but also impact their life insurance eligibility.Genetic testing could be a boon to consumers in some ways, but also impact their life insurance eligibility.

A strange predicament
Many people undergoing genetic testing are unaware that it could impact their eligibility for life insurance, and they're taken by surprise when denied coverage.  Others who know that their eligibility could be affected are faced with a choice.  They could learn what their genes can tell them and take appropriate preventative measures, but take a chance on being denied life insurance, or they could remain ignorant.  Much to the frustration of genetic researchers and the medical profession, some people are opting for ignorance.

Coverage discrimination based on genetic mutations has been barred for health insurance since 2008, but not for life, long term care (LTC) or disability insurance.  Proponents of genetic research are strongly in favor of expanding that protection to all forms of insurance, to encourage more people to get tested, but this would come at a cost.  Health insurance is different from these other forms of insurance because it is effectively mandatory due to the Affordable Care Act, which means that the premiums from young and healthy individuals can offset the additional costs of covering those with higher genetic risk.  Life, LTC and disability insurance is optional, and people with higher risk are more likely to apply for such coverage than those without high-risk mutations. One recent study found that people who learned they had a genetic predisposition toward Alzheimer's disease were five times more likely to buy LTC insurance.  This is certainly understandable, but obviously would prove quite costly for insurers.  Coverage protection for consumers must be weighed against the financial health of the companies providing that coverage.

Genetic testing has arrived and is here to stay, and the impact on the medical field and the life insurance industry is just now starting to be felt.  There is tremendous potential in such testing for identifying health risks.  "Knowledge is power," and the life insurance industry will have to figure out how to use that knowledge appropriately to the long-term benefit of both the industry and society.

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