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Will genetic test results be monetized in life insurance?

Hacariz, Oytun, Kleinow, Torsten, Macdonald, Angus S., Tapadar, Pradip, Thomas, R. Guy (2020) Will genetic test results be monetized in life insurance? Risk management and insurance review, . pp. 1-21. ISSN 1098-1616. E-ISSN 1540-6296. (doi:10.1111/rmir.12159) (KAR id:84559)


If life insurers are not permitted to use genetic test results in underwriting, they may face adverse selection. It is sometimes claimed that applicants will choose abnormally high sums insured as a form of financial gamble, possibly financed by life settlement companies (LSCs). The latter possibility is given some credence by the recent experience of “stranger‐originated life insurance” (STOLI) in the United States. We examine these claims, and find them unconvincing for four reasons. First, apparently high mortality implies surprisingly high probabilities of surviving for decades, so the gamble faces long odds. Second, LSCs would have to adopt a different business model, involving much longer time horizons. Third, STOLI is being effectively dealt with by the U.S. courts. Fourth, the gamble would be predicated upon a deep understanding of the genetic epidemiology, which is evolving, subject to uncertain biases, and cannot predict the emergence of effective treatments.

Item Type: Article
DOI/Identification number: 10.1111/rmir.12159
Uncontrolled keywords: adverse selection, genetic tests, life settlement, one‐shot gamble, stranger‐originated life insurance
Subjects: Q Science > QA Mathematics (inc Computing science)
Divisions: Divisions > Division of Computing, Engineering and Mathematical Sciences > School of Mathematics, Statistics and Actuarial Science
Depositing User: Pradip Tapadar
Date Deposited: 28 Nov 2020 21:27 UTC
Last Modified: 10 Dec 2022 15:12 UTC
Resource URI: (The current URI for this page, for reference purposes)

University of Kent Author Information

Tapadar, Pradip.

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Thomas, R. Guy.

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