Life Insurance Discrimination Laws

A basic definition of discrimination is when distinctions are made about the differences between people and things. In the law, there can be unfair types of discrimination when harmful action or inaction is taken against groups of people simply based on particular characteristics, such as gender, race and age.

In the world of insurance, providers discriminate on a regular basis by looking at a variety of characteristics, like age, and using that information to potentially charge higher premiums or decline coverage altogether.

These potential consequences have many people asking whether there are life insurance discrimination laws that prevent insurers from discriminating against individuals based on their genetic information.

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What are life insurance laws?

First, what is life insurance? Life insurance is a contract between the policyholder, who promises to pay insurance premiums, and the insurance provider, who promises to pay a specified amount of money to designated beneficiaries when the insured person dies.

Because life insurance is a contract, it is primarily governed by the general principles of state contract law. There are, however, some federal laws that govern the insurance industry. Wondering, what is a contract? Follow the link to learn more.

State Life Insurance Laws

According to the National Association of Insurance Commissioners (NAIC), life insurance and annuities are regulated by state insurance commissioners. The state laws and regulations imposed by these commissioners are designed to inform and protect insurance consumers.

Examples of state regulations relating to life insurance include:

• insurer disclosure duties (i.e., requirements that insurers provide policyholders with information to help them understand the policy);
• life insurance illustrations rules (i.e., parameters for hypothetical representations of a policy’s value and how it is expected to change over time); and
• rate, policy form and operating standards for the transaction of credit life insurance.

There are also state regulations concerning medical exams and privacy rights.

Specifically, consumers have a right (1) not to be classified for insurance purposes unless the classification corresponds to an accurate prediction of risk; and (2) not to be classified for insurance purposes on the basis of unacceptable classifiers such as race, sex, or genetic information.

These types of state laws help prevent unfair or unlawful life insurance discrimination.

Federal Life Insurance Laws

Although the insurance underwriting process is largely unregulated at the federal level, there are several key federal laws to be aware of.

• The Patient Protection and Affordable Care Act of 2010 (PPACA) and the Health Insurance Portability and Accountability Act of 1996 (HIPAA) together forbid insurers from considering pre-existing conditions in the underwriting process. PPACA also forbids health insurers from taking gender into account.
• The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits all health insurers from denying coverage or charging different premiums to insureds based on genetic information.
• The Department of Housing and Urban Development (HUD) provides that the Fair Housing Act (FHA) applies to insurance and prohibits housing practices that have an unjustified disparate impact on protected classes.

That said, there are no federal laws specifically forbidding insurers from engaging in discrimination in the underwriting process.

What are life insurance laws by state?

Every state has its own state insurance commission and laws. Therefore, life insurance policies can look different in each state, even for insurance companies operating in every state, because the governing laws are different.

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Genetic Testing and Life Insurance Discrimination

More and more life insurance companies are asking people if they have been genetically tested. Oftentimes, insurers deny coverage or significantly increase rates, based on genetic testing information. That has led to many people having questions about genetic testing and life insurance discrimination.

What is genetic testing?

What is genetic testing? A little background is needed to explain. Genes are segments of deoxyribonucleic acid (DNA) found in human cells. The sequence of DNA in each gene encodes hereditary information that controls human traits, physical characteristics, and disease predispositions.

A revolutionary scientific endeavor in the early 2000s known as The Human Genome Project led to genetic coding that was able to provide information about an individual’s unique genetic make-up.

Almost 2,000 diseases are now identifiable through genetic markers, which can be tested for. There are a wide variety of genetic tests for specific human characteristics and conditions.

A full genome scan of a person’s genetic make-up is expensive and could cost upwards of $1,000.

What is life insurance discrimination?

Insurance companies are in the business of a particular type of discrimination. They look at a variety of life insurance factors, like gender, age, and medical history, when classifying risk. Insurers attempt to classify insureds into separate risk pools based on differences in their risk profiles.

Why do insurers discriminate? They do this, among other reasons, so that they can charge different premiums to different groups of insureds based on differences in their risks. Thus, insurers openly discriminate among individuals based on observable characteristics.

Are there genetic testing life insurance discrimination laws?

Genetic factors have been used by insurance companies in underwriting for life insurance policies. The federal law GINA is in place to offer protection for people’s genetic privacy, but the protection is limited.

Specifically, GINA only protects people from genetic discrimination in two specific instances:

• Employment
• Health Insurance

On the other hand, GINA does not apply to:

• Life Insurance
• Disability Insurance
• Long-Term Care Insurance

Some states, however, do have existing statutes explicitly ban genetic discrimination in insurance.

How does genetic testing affect life insurance?

If a life insurance company discovers a consumer’s genetic markers are positive for one or more diseases, the insurer can use that information to charge higher premiums or decline coverage altogether. Here are some common things you should know about genetic testing and life insurance.

• You’re not required to get a genetic test. Insurance companies can’t force you to get genetic testing, although they could make it a general requirement for all insurance applicants and then deny coverage for failure to get tested. If companies make genetic testing a requirement, they would have to cover that expense, just as many companies do when they require a pre-coverage physical. In reality, genetic testing currently is too expensive for providers to incur those costs.
• Don’t lie about a genetic test. If an insurance provider asks if you’ve been genetically tested, you will have to answer truthfully. And false information or misrepresentation given to an insurance company could result in a refusal to issue a policy or canceling or voiding your policy if they discover the policyholder has lied about any information, including genetic testing. If you’ve had a genetic test, they can request the results and make coverage determinations based on that information.
• Don’t tell if you’re not asked. Insurance companies will always ask about medical history, but not all of them specifically ask about genetic testing. If you’re not specifically asked if you’ve had a genetic test done, you may not have to volunteer that information. That said, insurance companies will likely get your permission to access your medical records and so could have access to genetic testing results.

Get Help

Insurance providers routinely assess risk based on certain characteristics of their insureds to determine the cost of insurance.

While there are no federal laws specifically prohibiting discrimination in the insurance underwriting process, states laws can limit certain discriminatory practices. Some states have statutes that prevent insurance companies from classifying individuals for insurance purposes on the basis of unacceptable classifiers such as race or genetic information.

If you believe you’re being discriminated against by your life insurance provider based on your genetic information or some other improper basis, get legal help today by entering your ZIP code into our search tool. 

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