DNA Test Kit Could Void Your Life Insurance

Four huge privacy risks to those popular DNA test kits.

Kelly Song – Life insurance is all about risk — the insurer assesses a policy based on the likelihood of mortality, and the consumer is charged a premium rate based on complex actuarial tables.

But the boom in direct-to-consumer DNA testing kits such as those offered by Google-backed 23andMe, can now give consumers a peek into a future that life insurers can’t see.

Direct-to-consumer DNA kits, commonly used to track ancestry roots, increasingly allow individuals to assess their potential health risks by predicting genetic illnesses.

DNA kit assessments like the “Genetic Health Report” that 23andMe has been providing are on the rise since the Food and Drug Administration approved the Google-backed company to assess risk for 10 genetic diseases.

The report can recognize genetic variants associated with an increased risk of developing certain health conditions, including Late-Onset Alzheimer’s or Parkinson’s. It also provides a “Carrier Status” report, which determines if a customer carries a genetic variant for a health condition.

The variant typically means the customer does not have the genetic disease, but shows they are prone to passing it down to their children.

For life insurers, a sector that banks on its ability to manage risk-taking when it comes to health, this new DNA era could mean an information disadvantage versus the consumer.

The risk is theoretical at this point, but enough of a concern that it led bond rating agency Moody’s Investor Service to warn in a recent report that DNA testing could become a credit negative rating for life insurers. Your Relatives’ DNA Tests Shred YOUR Privacy

Many consumers and privacy watchdogs have expressed concerns about the use of DNA test results to deny health insurance, but there has been less attention paid to the potential influence this new consumer health technology will have over the life insurance policy market. Here are four key concepts that consumers should understand.

1. State laws protecting genetic information vary

Most life insurers are restricted by state laws from using genetic information in the underwriting process, which protect genetic results as a form of private property.

That legal precedent is the foundation for Moody’s argument that consumers have an advantage by being valued less risky than reality. But it is trickier than that. In fact, life insurers say that taking a direct-to-consumer genetic test may give them the upper hand.

Life insurers insist they can still request genetic information and retract an individual’s contract if they hide test results, leading to debate over related state laws.

Currently, 17 states have laws that restrict life insurers from using genetic information in the underwriting process, according to Moody’s. Even in states not protected by such laws, life insurers do not explicitly ask for genetic information right now, Moody’s said.

These laws go beyond the federal Genetic Information Nondiscrimination Act (GINA) which prevents genetic discrimination in the health insurance sector.

The laws act similarly to GINA, which prohibits health insurers from requesting, requiring, or using genetic information to make decisions about eligibility for health insurance, premium rates, coverage terms.

Life insurers rely on the honesty of applicants. The validity of a policy depends upon the full disclosure of all material information.

Life insurers say such laws can be interpreted in different ways. The American Council of Life Insurers (ACLI) said there are no state laws barring an insurer from using existing results, and only two states prohibit requiring an applicant to take a genetic test for life insurance.

If an individual does not give up their genetic information, the life insurer has “the right to void a policy,” the ACLI said.

“Both the applicant and the insurer must ‘put their cards on the table,’” the ACLI said in a statement to CNBC. Hiding genetic information would be contributing to what it deems adverse selection, according to the ACLI, and could affect the stability of a customer’s contract later on … Read more.  Image: 401kcalculator.org

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