Will group life trump adverse genetic testing?

Mike Taylor

Managing Editor and Publisher

20 March 2025

Group insurance offered via superannuation would represent a means of people obtaining life insurance cover for people who have undertaken genetic testing and obtained a negative result, according to the Financial Advice Association of Australia (FAAA).

The FAAA has told Treasury it continues to favour a model where the existing moratorium on insurers using genetic testing in life insurance below certain caps is legislated, but with indexation of the thresholds.

“We think this would provide a sensible balance, allowing people with high risk genetic test results to still access life insurance, but not at a level that would unreasonably impact the life insurance pools and increase costs for existing life insurance policyholders,” it said.

The submission said that advocates of a complete ban on the use of genetic testing, compared life insurance with health insurance, highlighting that health insurance is community-rated but pointed out that the model “is not the norm in insurance”.

“In most forms of insurance, access to cover and the cost of premiums are determined by the level of risk and the insurer’s willingness to accept that category of risk,” it said.

The submission also pointed out that life insurance are permitted to take into account many forms of risk such as weight, blood pressure and previous illnesses and to have blood tests.

“Equally, it is accepted that applying for life insurance requires the disclosure of family history, particularly with respect to issues such as heart attacks, strokes and cancer,” it said.

“Our key point is that it seems perverse that the ban on the use of relevant health information only applies to genetic testing, and not any other form of predictive health information. It would appear that this debate has been driven more from the perspective of promoting genetic testing specifically, rather than improving access and the affordability of life insurance,” the submission said.

“It is important to note that once someone has life insurance in Australia, that it is guaranteed renewable. This means that as long as the policyholder continues to pay the premiums, they can retain the cover, despite any deterioration in their health or later discovery of a risk factor.

“The life insurer cannot refuse to renew the cover just because the level of risk has increased significantly. For many people who have experienced a deterioration in their health, retaining their existing cover is a high priority. It is also the case, that people who already have cover, can already undertake genetic testing without the fear of losing their existing insurance as a result.”

“There are also other options for obtaining life insurance that do not involve the need for underwriting and disclosing a persons’ health status. Group superannuation schemes, or employer superannuation schemes offer insurance on what is known as an ‘automatic acceptance limit’ basis, where members can obtain cover up to a certain limit without needing to be underwritten,” the submission said.

“This type of cover would still be available to people who have undertaken genetic testing and obtained a negative result. It is also available to those with a family history of medical conditions.”