Can DNA test results make life insurance more expensive?

Genetic testing is an increasingly common way of detecting health issues in advance. But can life insurance companies use the results to charge more?

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a senior reporter and certified personal finance counselor at Policygenius, where he covers insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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Genetic testing has become an increasingly fast and affordable way to uncover health issues. For example, actor Chris Hemsworth decided to take a break from acting after genetic testing showed he had an increased risk of developing Alzheimer’s disease. [1] But revealing health risks can also affect your ability to buy life insurance.

Life insurance companies evaluate your health information when determining your overall risk and deciding how much you’ll pay for coverage. This underwriting process typically includes a medical exam and a review of your medical records, which can include genetic tests.

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What laws govern the use of genetic information?

The federal Genetic Information Nondiscrimination Act, passed in 2008, restricts the use of genetic information, but only for health insurance, not for life insurance underwriting. [2] In the absence of a federal regulation, some state legislatures have written their own laws to prohibit life insurers from using genetic information in underwriting.

States with life insurance nondiscrimination laws related to genomics

  • Connecticut: When offering life, disability, or long-term care insurance, insurers, health care centers, and certain other organizations are prohibited from: 1) Using information from a company that does genetic testing on individuals without getting your written permission first. 2) Requiring you to take a genetic test as a condition for getting insurance or using the results of a test to determine your insurance premiums. 3) Using your family members’ genetic test results to decide your insurance rates or coverage, unless those results are already in your medical records.

  • Florida: Life, long-term care, or disability insurance companies are prohibited from: 1) Denying or limiting coverage, or charging you higher rates because of your genetic information unless you’ve already been diagnosed with a specific condition. 2) Asking for or using your genetic information for anything related to insurance, like deciding whether to insure you or setting the price of your insurance.

  • Illinois: A company that offers genetic tests directly to consumers can’t give your genetic test results or any of your personal information to health or life insurance companies unless you give them written permission. 

  • Louisiana: Extends the prohibitions on the use of genetic testing in health insurance to life insurance and long-term insurance. It also makes it illegal for insurance companies to do unfair or deceptive things based on your genetic information when it comes to life or long-term care insurance.

  • Maine: Insurance companies can’t use information from direct-to-consumer genetic tests that individuals take without getting permission from the person who was tested. This rule applies to life insurance, disability insurance, and annuities.

  • South Dakota: Extends laws that prohibit health insurance companies from making underwriting decisions based on genetic tests to include life and long-term care insurance companies. It also says any company providing genetic testing directly to consumers can’t share the test results or any personal information with health insurance, life insurance, or long-term care insurance companies unless the consumer gives written permission.

Source: Genome Statute and Legislation Database, National Human Genome Research Institute

The restrictions vary based on the state, says Patricia Born, a professor of risk management and insurance at Florida State University who's researched how genetic tests are used in life insurance underwriting. Many of them apply only to direct-to-consumer tests, like those you’d get from AncestryDNA or 23andMe. However, insurers are permitted to underwrite treatment for a medical condition that was unearthed by genetic testing. For example, if your doctor orders a genetic test to determine your risk of breast cancer and you receive treatment as a result, your life insurance company can use that information.

Genetic testing & adverse selection

Genetic tests create what’s known as an adverse selection problem for life insurance companies. The idea here is that  people who are likely to cost the life insurance company more money because of health or lifestyle risks — risks the life insurance company isn’t privy to —  are also the most likely people to buy life insurance. Imagine you take a genetic test that tells you you’re going to die in five years. If you buy life insurance and the insurance company can’t see the results of your test, they’re going to lose money on your policy. 

“If an applicant knows they have a likelihood of dying prematurely and they don’t have to disclose that to the insurance company, it creates a situation called adverse selection, where the insurance companies may accept people for life insurance at a rate that’s not adequate, because the individual is going to die sooner than they expected,” Born says.

If this scenario becomes more common, it would be natural for insurance companies to raise their prices to make up for their losses from all the people applying who know they’re going to die soon, she says. Insurance companies try to collect information on their customers’ health and other factors to get a better idea of that likelihood.

How genetic testing affects life insurance customers

So is it risky for consumers to take genetic tests? When it comes to direct-to-consumer tests, there is a chance that the results could end up in the hands of a life insurance underwriter, especially if you don’t live in a state that restricts how life insurance companies can use information from DNA tests. But if a doctor orders a genetic test, both you and your life insurance company could benefit.

“If people are taking these tests and getting treated, maybe they’ll live as long as they should or longer because they’re getting appropriate treatment,” Born says.

Genetic tests represent only a fraction of the factors that life insurance companies are likely to consider. When it comes to how much you pay for life insurance, things like your gender, age, and whether or not you smoke will probably have the same if not more weight than, say, a genetic test that says you have a 10% chance of contracting breast cancer. Life insurance companies have plenty of other ways of predicting mortality — it’s their whole business.

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