Life insurance and genetic tests
Thursday, 03 Jul 2008 17:57
Advances in medical science means screening for diseases has become far more sophisticated. Doctors can check for early signs of disease before symptoms appear and genetic tests can pick up on the probability of an individual developing a disorder, years before this may occur.
But the advances in medicine can have a knock-on effect and as tests to detect disease become more accurate, consumers may be faced with higher life insurance premiums or perhaps no insurance at all.
Has the insurance industry caught up with medicine and what does it mean for the consumer?
The Association of British Insurers (ABI) recently extended its 'moratorium' – an industry-wide agreement – that consumers may take out substantial amounts of insurance without having to disclose adverse results of predictive genetic tests to 2014.
A predictive genetic test is a medical test can identify individuals at risk of developing a certain condition. They are generally given to those with a family history of a particular disease and the results can be used to take preventative steps.
Tests are available for several types of cancer, including breast, ovarian and colorectal, as well as other inherited diseases such as Huntington's.
But these tests can also have implications for insurance.
Currently, consumers may buy a policy of up to £500,000 for life insurance and £300,000 for critical illness insurance without disclosing any test results.
Beyond this value, insurers may only use test results approved by the GAIC which is an independent government committee. This is currently only the case for Huntington's disease and the ABI said there are no plans to extend this to other tests.
Insurers will meet again in 2011 to decide what will happen after this date.
Benjamin Francis from charity the Genetic Interest Group (GIG) says the agreement is important for consumers.
"Information could be misused and it is important to battle against this," he says.
The agreement not to require information about predictive genetic test nor to pressure individuals to take a test is a good thing, Mr Francis adds.
The charity is currently asking support groups whether they have experienced any problems with getting insurance, and hopes to work with insurers in the future to prevent discrimination.
The deal works well for consumers, the ABI says, as it allows individuals worried about their health to go for a test without having to disclose the results to their insurer.
"The moratorium prohibits insurance companies from either asking applicants about predictive test results and from asking them to take predictive tests in order to get insurance," says ABI spokesperson Jonathan French.
But if you do take a test and it turns out to be negative, it may pay to tell your insurer, Mr French adds.
"The classic example is the test for breast cancer. So if a woman has a history of breast cancer, she would be expected to disclose this but if she has had a test and the result was negative, the likelihood is this would be taken into account.
"It is a fact that the way insurance is worked out, if you have a family history the likelihood is you would be charged higher premiums because the risk is by definition higher, but if you can prove the risk is not higher you may be able to reduce them."
Technically, this means a consumer who knows they are at a higher risk of developing a disease such as Alzheimer's could take out a large amount of insurance without paying the higher premium associated with this risk.
But in reality, insurers go by family history – so if your immediate family has a heritable disease, this will affect your premiums.
This does not necessarily mean you will not be able to afford insurance, however, as policy advisor Matt Morris from specialist life insurance brokers Lifesearch explains.
"When someone calls up for life cover, one of the questions is on family history, for example whether one of your close family has died before the age of 50 and if there is a strong history of an illness, and an underwriter would decide whether to load the premium or make exclusions."
'Loading' a premium is an insurance term for increasing the basic price for a policy to account for a higher risk.
But insurers assess risk differently, Mr Morris says, so prices will vary.
"The best thing to do is to speak to an advisory company. Price comparison sites will not tell you if the premium will go up or not, so the best thing is to speak to an independent advisor who will know which companies will load a policy and which won't."
It is important to make sure your advisor is independent, Mr Morris says, as they will be able to search the whole market. Also be aware that some will charge you a fee for this service.
And do not be tempted to lie to get a cheaper premium, Mr Morris warns, as this will be "a waste of time and money" as the policy simply will not pay out if you deliberately mislead your insurer.
If you do believe you are being discriminated against, Mr Francis from GIG advises speaking to the ABI, who will be able to advise you.
Sarah Routledge