Contents

• Life Insurance Medical Screening for Diseases and Health Conditions
• Life Insurance Medical Screening Using Genetic Testing
• NIB Genetic Testing Insurance
• The Use of Genetic Test Results in Life Insurance
• Applying for Life Insurance with a Pre-existing Condition

You apply for life insurance so that you know your spouse and dependents will be protected in the event of your death, and while you’re not planning on that happening any time soon, neither is your life insurance provider. Your life insurance company will calculate your premiums and your level of cover based on their research and information into your health and medical and family history, and while we will all collect on our life insurance policies sooner or later, your life insurance premiums are based on how long your provider expects you to live and how long they have to collect those premiums, to recoup the money they will eventually have to pay.

So how do life insurance companies predict the time of your death? Of course they don’t really, but they use many of the tools at their disposal to put together a detailed picture of your health and life expectancy, based on your medical history, medical conditions in your family your current health and your habits and lifestyle behaviours.

As well as medical screening for certain illnesses and diseases as part of your application, your life insurance company will want to know about any pre-existing conditions, and some insurance companies are even pushing for the right to conduct genetic testing, to assess your predisposition for certain diseases. While there are a number of life insurance policies available which require no medical tests, it is important that you provide as much information as possible to your insurance company, to secure the most comprehensive policy, and the one which will protect you when you need it.

Life Insurance Medical Screening for Diseases and Health Conditions

While a life insurance application can seem invasive, life insurance providers have always discriminated between applicants in order to provide equal premiums for equal risk. This means that someone who has a higher risk of dying sooner pays a higher premium than someone at a low risk. Although this discrimination may seem inappropriate anywhere else, in the insurance industry it is a socially accepted and legally protected practice.

This means that as part of your life insurance application you will have to participate in a medical screening so that your provider can determine your risk of developing certain major diseases. Medical screening is particularly common among older life insurance applicants, and those applying for especially large or comprehensive policies. Based on your test results, your life insurance provider will then look for indicators of diseases or illnesses such as:

• Heart disease – In Australia, coronary heart disease kills more people than any other disease and in 2006 accounted for 17% of all deaths Australia-wide. As part of your medical screening your blood pressure will be used to determine your cholesterol level as high cholesterol is an indicator of coronary artery disease. Then, depending on your age and medical history, you may need to have an electrocardiogram to check for an irregular heartbeat.
• HIV – HIV is the virus which can develop into AIDS and your blood will be tested for indications of the virus. If you have contracted HIV, antibodies or antigens will have developed in response to the virus and will be present in your blood.
• Diabetes – If you have chronic diabetes you are more likely to suffer a heart attack, kidney disease, stroke and many other health conditions and so your blood and urine will be tested for unusually high glucose levels which can indicate your body is not processing sugars properly.
• Kidney disease – Kidney disease can lead to kidney failure and if you do not receive dialysis or a transplant the disease can be fatal. Your blood will be checked for high levels of blood urea nitrogen and your urine for high levels of creatinine, protein and red blood cells.
• Liver disease – Liver disease can develop into live cancer, or cause gastrointestinal bleeding. Your blood will be screened as part of a life insurance assessment, for sighs of a high bilirubin level or elevated levels of the enzymes which normally appear in liver cells.
• Cancer – Some forms of cancer can be identified through blood and urine tests, although a possible diagnosis will be confirmed through more accurate testing. Blood cancers such as leukaemia can be identified in your blood, and bladder or kidney cancer can be identified in your urine. The levels of prostate specific antigen can also indicate prostate cancer.
• Alzheimers Disease
• Aortic Surgery
• Aplastic Anaemia
• Benign Brain Tumour
• Blindness
• Severe Burns
• Cancer
• Cardiomyopathy
• Coma
• Coronary Artery Angiography
• Coronary Bypass Surgery
• Deafness
• Dementia
• Diplegia
• Encephalitis
• Hemiplegia
• Heart Attack
• H.I.V Accidental Infection
• H.I.V Occupational Acquired
• Kidney Failure Chronic
• Loss of Limbs or Eye
• Loss of Speech
• Loss of Independent Existence
• Lung Disease
• Major Head Trauma
• Major Organ Transplant
• Motor Neurone Disease
• Multiple Sclerosis
• Out of Hospital Cardiac Arrest
• Parkinsons Disease
• Peripheral Neuropathy
• Pulmonary Hypertension
• Quadriplegia
• Stroke
• Terminal Illness

Life Insurance Medical Screening Using Genetic Testing

Life insurance providers in Australia are not able to require you take a genetic test as part of medical screening for your policy. Once a life insurance policy is approved and commences, you are not required to disclose any new information to your insurer.

However, if you have undergone genetic tests already, to determine for your own peace of mind whether you carry a certain genetic disease, then you are required to disclose the results of those tests. This can lead to opting out of a genetic test when a family member is diagnosed or dies for a certain disorder, for example parents whose child dies from muscular dystrophy for example, may refrain from having their other children tested so as not to jeopardise the surviving childrens’ chances at obtaining life insurance when they have families of their own to protect.

Health insurer NIB is the first in Australia to offer genetic testing as part of their medical screening process for life insurance. NIB sent direct letters to 5,000 customers offering a discounted price for a genetic test so that they could be informed about their genetic risks, if any, and take steps to improve their health behaviours. While life insurance policies cannot be adjusted after they have been approved, if these customers wanted to change or upgrade their policies, move to a different insurer or open a superannuation fund, they would have to disclose the results of these genetic tests.

Also against genetic testing as a form of medical screening for life insurance is the argument that those unlucky enough to have disease in their genes are just as unlucky as those people who fall off a ladder while hanging Christmas lights and neither should be penalised with higher premiums or a refusal of life insurance. At the same time, if you know you have a good chance of developing a certain disease, you are not really fulfilling the definition of life insurance and as is the case with any form of insurance, those who don’t claim – those who never had a chance of developing the disease – are paying for those who do claim.

NIB Genetic Testing Insurance

Early in 2010, insurer NIB sent letters to their customers offering cut-price genetic tests with the intention to help those customers better manage their health, given more information. However, the very fact that these Australians underwent a genetic test could mean higher insurance premiums in the future, and could put their ability to obtain insurance or receive a payout in jeopardy.

The NIB letter encouraged customers to find out whether they had a genetic risk of developing a preventable disease such as diabetes, heart attack or some forms of cancer. The discounted genetic tests were also organised through a US company called Navigenics where selected NIB customers would receive the tests for half of the usual $1,000 price tag.

Once you have taken a genetic test, you can be forced to reveal the results if you apply for a new or upgraded life insurance policy, income protection, mortgage protection and with some superannuation funds which provide life insurance. With information about your genetic predisposition towards certain illnesses and diseases, an insurance company can raise your premiums, and if you don’t disclose that you have had a genetic test in your application, your insurer can void any payout.

Based on the medical assessments which are allowed to be conducted, insurers can label certain customers as high risk and impose higher premiums, a shorter period of cover, or restrict coverage so it does not include a payout upon death caused by certain conditions. Currently life insurance is a contract which is based on mutual good faith, but with genetic testing, the power lies with the insurer. Life insurance companies can also gain access to the results of a genetic test if you show the results to your doctor, and they go into your medical records, but even this still doesn’t completely remove the risk of misinterpretation of the results.

NIB are not conducting the genetic tests themselves and the results of the tests are between Navigenics and the customer. At the same time, Australian insurance companies are not able to set premiums according to individual risk factors, but rather across the board of a certain demographic for example 25 to 35 year old women who smoke.

The Use of Genetic Test Results in Life Insurance

In 2005 a binding industry standard was released to regulate the insurance industry with regards to genetic testing. Insurance providers who are members of the IFSA, which changed its name to the Financial Services Council in 2010, must comply with Standard number 11 which states that life insurers are not permitted to ask someone to take a genetic test.

Life insurers cannot ask and in no way pressure or coerce you to take a genetic test with the promise of qualifying for a lower premium. Standard number 11 also requires written permission for an insurer to access the results of a genetic test, and will not allow the results to be used as part of a relative’s application. Also, privacy law means that one insurance company is not allowed to share any genetic test result information with another company.

The Financial Services Council law means that genetic test results can only be collected if you give permission and where the information is necessary. You will also have to be informed of why the information is needed and who it will be disclosed to. Insurance providers may believe that genetic test results are just as relevant as any other medical information, and the results of a genetic test can tell you three things:

1. You will definitely develop a certain disease.
2. You have an above average chance of developing the disease.
3. You are a carrier for a certain disease.

While you may seek out higher levels of life insurance if your genetic test results reveal any one of these three things, an insurance provider is not always justified in raising their premiums as a result of your risk factors, because the test results were only possible thanks to advances in medical technology, the same technology which can help find cures for those diseases.

Applying for Life Insurance with a Pre-existing Condition

A pre-existing condition is categorised differently by each life insurance company, but if you have suffered a disease in the past, or are currently seeking treatment for a medical condition, you may not be able to obtain cover, or the full level of cover, for that particular disease. A pre-existing condition is usually one which existed six months before you commenced the policy, but each insurer uses a different time period, while others will preclude any condition which would have been picked up had you sought medical advice in the period before applying, as pre-existing. You may also have to endure a waiting period for coverage for a pre-existing condition, and this can be up to 12 months after your policy is activated or upgraded.

You may also find that certain health problems are excluded in some cases, for example, if you suffer with asthma but haven’t had an attack for a year prior to applying for life insurance this won’t usually be considered a pre-existing condition. Similarly, if you have diabetes, but it is under control and you don’t have to take any drugs to control it, it may not affect your policy.

It is important to consider pre-existing conditions when applying for life insurance because if your death is a result of this condition your dependants may not receive a payout. Some insurance companies will exclude any condition or disease you have been treated for in the past, regardless of the time which has elapsed, or the medical screenings which come up clear. Others will allow a pre-existing condition to be covered if consultations with a doctor have ceased within the insurer’s time period – often six months, but sometimes up to five years.

While it can be tempting to leave out details of past medical experiences and diseases, your life insurance provider will likely request your medical records as part of the application and medical screening process so it is best to be honest up front, especially since lying on your application can void any benefit payouts for your family. Also don’t forget to disclose information about a family history of disease, even if you have shown no signs, or had a genetic test, if you have a family history of diabetes and you have an accident and die as a result of a diabetic complication, a life insurance company may not pay out a benefit in full.

If you do have a pre-existing condition in your medical or family history, don’t be daunted by the medical screening life insurers conduct for diseases and health conditions. Instead, follow these three simple steps to apply for life insurance with a pre-existing disease or health condition:

1. Work with an experienced insurance agent. Look for an insurance agent who is experienced with impaired risk life insurance applications. If you have a pre-existing condition, you need to work with an insurance agent who has experience in securing insurance for high risk cases, and knows how to present your case to an insurer in a favourable light.
2. Organise your documents. Before you start any applications or sourcing any quotes, make sure you have all the information about your condition available. This ensures full disclosure with the insurer, providing all the names of the diseases or illnesses as well as the dates, medications taken and treatments conducted. Also make sure that specific doses of medications are also listed, as well as details of any medications you are still taking. You’ll need to make sure you have a list of all the medical professionals who have treated you over the last seven to 10 years and this step can take some time to organise. However, in compiling an organised and professional folder of all of this information, and making several copies for distribution, you will show you have nothing to hide, and have a greater chance of success.
3. Write a health summary. As part of this file, write a summary of your health up to this point as this gives you a chance to highlight positive aspects of your lifestyle, for example, you never drink or you have never smoked, or gave up smoking 20 years ago. Also note aspects of your lifestyle such as jogging regularly. Don’t worry about including details of diseases you have recovered from as these are considered cured, and you will only need to detail information about diseases which are in remission, or those which are no longer producing symptoms even if you haven’t been cured.

Diseases and health conditions assessed for a life insurance policy will differ between providers so make sure you read the fine print on the inclusions and exclusions of cover, and understand all medical testing procedures for your assessment.