Life insurance: The price of genes - MoneySense

Life insurance: The price of genes

Should you pay more for insurance because of your genetic makeup?


One of the hottest issues in life insurance today is genetic testing. The goal of underwriting is, after all, to predict the likelihood that individuals will die earlier than others of the same age. What could be more helpful than a test indicating whether a person carries a gene that leads to cancer or heart disease?

The hitch, of course, is that no genetic test can predict these diseases with any significant accuracy— certainly not enough to justify charging higher premiums on a life insurance policy. “At this point, no one is using genetic testing,” says Brian Baxter, chair of the Canadian Institute of Underwriters. However, Canadian law does not restrict insurers from using the results of genetic tests to set their premiums.

One of the main concerns is fairness: if predictive genetic tests were to someday become available, should an insurance company have the right to require them before issuing a policy? Would that not be penalizing someone not for having a disease, but simply for having a predisposition? The industry tends to argue that this would not be fundamentally different from giving an obese person or a smoker a higher rating because they are more likely to develop an illness in the future. But Canadians disagree. According to a 2003 federal government report, “virtually everyone insists that insurance companies should not have access to genetic data.”

If Canadian law were to ban insurance companies from obtaining the results of predictive genetic tests, the result may be higher premiums across the board. It’s simple economics: if people were able to get tested for certain high-risk genes, but their insurance companies were not allowed access to the results, then those people who tested positive would be more likely to buy life insurance. As a result, the tables that underwriters use for the general population would no longer be valid, and companies would have to raise their premiums to reflect the added risk.