The Australian government is planning to ban life insurers from using predictive genetic test results to discriminate against people. Predictive genetic tests can identify gene variants linked to diseases that might appear later in life but are not yet visible when the test is done.
Right now, some people are worried that life insurers might deny them coverage or charge higher premiums if they take these tests, so they avoid genetic testing altogether. To address this, the government has proposed a total ban on the use of these genetic test results by life insurers.
How Life Insurance Works
Life insurance is a type of voluntary insurance that’s based on individual risk. Insurers consider factors like your family’s medical history and your personal habits to set your premiums. Once you have life insurance, it’s guaranteed renewable, meaning the insurer can’t cancel or change your policy as long as you keep paying the premiums, even if your health changes. This is why people need to think carefully before switching life insurance policies, especially if they’ve developed health issues since their first policy was issued.
The Current Moratorium on Genetic Testing
In 2019, Australia introduced a partial moratorium on disclosing genetic test results for certain life insurance applications. This moratorium, effective from 1 July 2019, prevents the use of genetic test results for some types of coverage below specific thresholds. However, based on APRA data, these thresholds are considerably lower than the average sum insured:
| Policy cover | Moratorium limit | APRA average |
|---|---|---|
| Death | $500,000 | $713,959 |
| Total permanent disability | $500,000 | $849,128 |
| Trauma and/or critical illness | $200,000 | $207,414 |
| Disability income insurance | $4,000* a month | $7,706 a month |
* any combination of income protection, salary continuance or business expenses cover.
Ongoing Discrimination Concerns
Even with this moratorium, many people still worry that taking a genetic test could hurt their chances of getting affordable life insurance. Research from Monash University found that 35% of people who had taken a genetic test faced difficulties getting life insurance. Some had their applications rejected, while others were advised by financial professionals that they wouldn’t qualify for coverage. Insurers sometimes placed restrictions on policies or charged higher premiums based on test results. In one case, a 43-year-old woman with a BRCA2 gene variant, who had taken preventative measures like surgery, was denied life insurance, even though she had no personal history of cancer.
The Government’s Response
The Australian government has now announced a full ban on the use of predictive genetic tests in life insurance underwriting. This ban is meant to stop the discrimination that still exists. However, the government has not yet introduced the legislation for these reforms or announced when the ban will take effect. The ban will be reviewed after five years, and it only applies to predictive genetic tests, not to diagnostic tests done to confirm an existing condition based on symptoms.
Global Examples
Australia isn’t the only country facing this issue. In the UK, insurers can’t use genetic test results unless the information benefits the person applying for insurance, or the person voluntarily provides the results. There’s one exception: insurers can use genetic test results for Huntington’s disease for life insurance policies worth over £500,000.
In Canada, the Genetic Non-Discrimination Act makes it illegal for insurers or any other entity to ask for or use genetic test results, except when the individual voluntarily discloses a negative result (meaning they don’t have the genetic condition that runs in their family).
In the United States, the Genetic Information Nondiscrimination Act (GINA) prevents genetic test results from being used in health insurance and employment, but not in life insurance. However, Florida has a state law that bans the use of predictive genetic test results in life insurance underwriting.
Conclusion
While genetic testing has the potential to improve health outcomes, it has also created concerns about discrimination, especially in life insurance. Australia’s move to ban the use of predictive genetic tests in life insurance underwriting aims to protect consumers and encourage participation in genetic testing and research without fear of losing access to affordable life insurance.
Pitt Martin Group is a CPA accounting firm, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.
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By Angela Abejo @ Pitt Martin Tax
