Genetic testing, adverse selection, and the demand for life insurance

Area of Science:

• Genetics
• Insurance Medicine
• Public Health

Background:

• Genetic testing for adult-onset diseases is increasing.
• Debate exists on insurers using genetic test results for underwriting.
• Potential for adverse selection in life insurance markets is a concern.

Purpose of the Study:

• To assess adverse selection in life insurance markets.
• To determine if women with BRCA1 gene mutations purchase more life insurance.
• To analyze the impact of genetic test result knowledge on insurance purchasing behavior.

Main Methods:

• Comparative analysis of women tested for BRCA1 gene mutations and comparable untested women.
• Utilized data on life insurance purchasing behavior.
• Focused on scenarios where individuals know results, but insurers do not.

Main Results:

• Women testing positive for BRCA1 gene mutations did not purchase more life insurance.
• No evidence of adverse selection was found in this cohort.
• Informational advantage from genetic testing was not exploited for increased life insurance coverage.

Conclusions:

• Genetic test results for BRCA1 mutations do not lead to increased life insurance purchases.
• Concerns regarding adverse selection in life insurance markets due to genetic testing may be overstated.
• Further research is needed to understand the broader implications of genetic testing on insurance markets.