Underwriting a High-Risk Applicant Without Violating the Law
Marcus, age 47, applies for $750,000 of 20-year term. On the application he discloses a treated hepatitis C infection from 2015 with sustained viral response, a body mass index of 34, and a father who died of colon cancer at 52. The insurer's underwriter orders an attending physician statement, an HIV test, and a genetic test for a hereditary colon cancer syndrome. Marcus's agent learns the insurer also requested a motor vehicle report and a prescription database check. Marcus asks the agent whether he can refuse the genetic test, whether his brother's recent cancer diagnosis must be disclosed, and whether the insurer can decline him solely because of his BMI.
1. Advise Marcus on the genetic test, the HIV test, and the scope of information the insurer may lawfully obtain.
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The insurer may lawfully request the HIV test and the prescription and motor vehicle reports, but it must follow state requirements: written informed consent, disclosure of the purpose, and in many states a separate consent form for HIV testing, with strict confidentiality rules on the results. The genetic test is different. Federal law (GINA) bars health insurers from using genetic information in eligibility and premium decisions, and many states go further and prohibit insurers from requesting genetic testing at all or from using results. Marcus can refuse the genetic test, and the insurer generally cannot treat refusal as an adverse underwriting factor for a policy it would otherwise issue, though it may underwrite on the family history and medical records it already has. The agent should not tell Marcus to withhold information; instead, confirm the insurer's consent forms are complete and that any genetic inquiry complies with state law.
2. Should Marcus disclose his brother's cancer diagnosis, and how should the underwriter weigh BMI, family history, and the resolved hepatitis C?
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Marcus must answer the application questions as written. If the application asks about family history, he must disclose his brother's diagnosis; if it asks only about the applicant's own health, he need not volunteer it, but he must not misstate anything asked. Concealment or a material misrepresentation can let the insurer rescind within the contestability period, so accuracy protects him.
On risk selection, the underwriter classifies rather than judges. The resolved hepatitis C with sustained viral response may be rated or, depending on the insurer's guidelines and time elapsed, considered standard or near-standard. BMI of 34 may produce a table rating or a higher substandard class, but the insurer cannot decline him solely because of BMI if state law bars discrimination on disability or perceived disability grounds; it must tie the decision to mortality risk and apply consistent guidelines. Family history of early colon cancer may add a debit, especially absent genetic clarification. The likely outcome is a substandard offer or a reduced face amount rather than an outright decline, and Marcus should compare offers from several insurers because their guidelines differ.