Genetic Testing – Coming soon to a policy near you?
We launched a new special offer on Life Insurance for members this week, and it’s been inundated with interest. It’s just as well, because reports this week said scientific developments could make life insurance premiums higher in future.
Research by the Institute of Actuaries of Australia predicted that as predictive genetic testing becomes more popular, claims against insurance policies could rise by 7 per cent to 17 per cent, driving up costs.
Why? Those who are genetically pre-disposed to a condition will be more likely to take out life insurance. Those who are not pre-disposed could dump their policies.
The report claims such a scenario would add further pressure on the struggling life insurance sector, which has been battling to cope with rising lapse rates and claims for several years.
It’s hard to imagine any insurance company “struggling” but the Institute of Actuaries' Jessica Chen (co-author of the report) told us on the Daily Drive show this week that insurance claims are expected to rise as a result of genetic testing.
That’s because people who discover they have a low risk of certain diseases will be tempted to allow insurance policies to lapse while those with higher risks of contracting disease will be more motivated to purchase policies.
I asked Jessica how difficult it would be for insurers it find out if a customer had done a genetic test and simply didn’t chose to share that information.
Ultimately there’s no way the insurer could find out, as most genetic tests are what they call “direct to consumer' and are usually done off shore.
Under the current regulations, insurers do have the right to ask individuals if they have taken a genetic test, although in practice they rarely do.
So what is stopping customers from taking out a policy and then increasing their cover down the track? You can bet your bottom dollar that raising your insurance cover is a red flag to any insurer and they would use all and any means at their disposal to find out why you had increased your cover, particularly if a claim is made not long after.
This discussion fails to address the other reason people take out insurance policy’s…accidents. It’s all good and well to not take out cover because you’re low risk when it comes to disease but accidents can and do happen.
There are ethical problems here as well. When we take out cover now, we’re already asked a myriad of questions from how dangerous our job is to smoking, drinking and family history of certain diseases such as heart disease or diabetes. If you’re declined insurance based on a genetic test, does that constitute discrimination?
If we ever get to the point where your approval to get a life insurance policy is dependant on whether your genetic tests are good, Heaven help us all…..then we would see the life insurance sector will be “struggling” as no one will meet the criteria.
Have you considered having genetic test to examine future health issues? Tell us in feedback below.