The availability of home DNA-testing kits has resulted in many unanswered questions about life insurance.
Life insurers are concerned that their policyholders may hide results from DNA tests that show they may have a propensity for specific health problems. And privacy and consumer advocates are concerned that life insurers will use DNA tests to refuse coverage or charge more.
Under federal law - known as GINA (Genetic Information Nondiscrimination Act) - companies are not allowed to use your genetic information against you for things like health insurance or a job. But those protections do not currently carry over to life insurance, disability, and long-term care insurance.
The questions arise as genetic testing has been growing in popularity. There are various genetic tests - some that focus on your ancestry and others that focus on your genetic predisposition to various health issues.
Google-backed 23andMe, for example, can recognize genetic variants associated with an increased risk of developing certain health conditions, including late-onset Alzheimer's or Parkinson's.
Since life insurers want to know as much as they can about your health before writing a policy, how can these tests benefit you - or will insurers use them against you?
The life insurance industry says the more information they have, the better they can underwrite you. Insurers are already armed with a wealth of data, since they often require applicants to undergo a medical exam before a policy is written.
Benefits to consumers
In many ways, having a DNA test that can show how predisposed you are to certain afflictions could benefit consumers, who may not however want to share the results with their life insurer if they feel the report is bad.
You have no obligation to report what you find out in a genetic test to your insurer. And according to a report by Moody's Investor Services, 17 states have laws that impose restrictions on life insurers to keep them from using genetic information in the underwriting process.
While an insurer cannot demand that you hand over the results from a home kit, if they require it as part of the underwriting process you would have no choice if you want a policy.
The American Council of Life Insurers says that its members rely on the honesty of applicants and their full disclosure of all material information pertaining to their health.
That said, insurers routinely write life policies for people with a family history of various ailments like cancer, diabetes and heart disease. If you have stage-four cancer, however, it's likely that no insurer would cover you.
But, if a consumer buys a policy without disclosing genetic predispositions, they will most likely be valued as less risky than they should be, earning them slightly better premiums, theoretically.
Advantage life insurers?
The other side of the argument is that DNA testing could be a positive for insurers if they start requiring testing prior to writing a policy. The concern, though, is that they would use this information to charge higher rates.
But, what if a person finds out they are predisposed to a heart disease, for example, and they change their lifestyle? Insurers are more concerned about how fit you are now than what might be coming down the pike.
And if there are signs that genetic testing is working at odds with actuarial tables, life insurance companies can always respond by adjusting policies and rates.
Insurers may also push states to enact laws that allow them to conduct genetic testing prior to writing a policy.
One way they may approach the situation is to raise prices across the board, but ask consumers to provide genetic information in return for a discount. They may also argue that access to genetic information could in fact reduce rates overall, as it would give them more refined data to use in the underwriting process.
The American Council of Life Insurers also points out that improvements in medical testing have actually reduced rates because it prompts people to take control over their health.