What are the implications of genetic testing on life insurance?
Declining costs to increase use of genetic testing.
Whether you're after an understanding of where your family came from or want to know what the future holds for your health, many Australians are turning to genetic testing.
But, genetic testing is having an unexpected impact on life insurance industry.
According to a report from the Actuaries Institute, Genetics – a testing time for insurers?, genetic testing has the potential to profoundly impact the life insurance landscape.
As declining costs drive more and more people to find out about their genes, genetic testing is a double-edged sword for both the life insurance industry and those getting tested.
On one side, genetic testing may help you find out about a potentially life threatening condition and provide you with improved treatment options.
"It's a fast evolving space and the cost of testing is dropping rapidly and potentially [genetic testing] creates a far better understanding of people not just their medical condition but their propensity to react to different drugs, which means you can create much better treatments," said TAL’s general manager for innovation Dan Taylor.
However, on the other side once that information is known it places the insurer at a disadvantage if that information is not shared.
“For the life insurance industry, if health information known to the insurance applicant is not disclosed, it may be expected to lead to anti-selection, increasing premiums and ultimately impacting the financial sustainability of the industry,” the report said.
While insurers are not allowed to ask you to undergo a genetic test, once you have undergone a test an insurer may ask for the results.
"There are complex issues for life insurance regarding genetic testing, cover availability and affordability. What needs to be resolved is a good response to the threat that test results may be used in life insurance underwriting and lead to discrimination,” said co-author of the report Jessica Chen in a statement.
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