Some Canadians are paying high rates for critical illness insurance because the sellers aren't taking into consideration genetic tests that show the client's risk is reduced.

Critical illness insurance — which pays for care if the buyer develops a debilitating illness, such as cancer — is a fast-selling product, insurance companies say.

They sometimes set rates for a client based on their family history, even when genetic tests show that the individual doesn't have the genetic mutation that has made their families high-risk in the past.

A test showed that Susan Goldberg of Thunder Bay, Ont., didn't inherit the genetic mutation that led to the deaths of her mother and grandmother from cancer.

But she still pays 75 per cent more for her insurance than the typical client.

David Brown, her broker, said insurance companies rely more heavily on family history than genetics.

"They are not convinced that the genetic testing can guarantee a person is not going to get an illness," he said.

"The relationship between genes and future morbidity is extremely complex. At this point in time there are few genetic tests that have real predictive value for insurance purposes," he told Jody Porter from CBC News.

Many factors affect rating

Manulife, the underwriter of Goldberg's policy, said it wouldn't talk about her case specifically.

But spokesman Tom Nunn said in an e-mail that many factors go into a rating. So in assessing someone looking for insurance for breast cancer, the company would consider such things as:

• Whether her breasts were exposed to radiation.
• Whether she had her first child after the age of 30.
• Whether she had prolonged hormone replacement therapy after menopause.
• Whether she had a positive genetic test.

A check mark beside any one of those things is likely to increase the premium. But there's no box to check in the absence of any one of those conditions, and nothing saying how negative genetic test results would affect a rating.

By law, insurance companies aren't allowed to ask clients to get tested for genetic defects. But if a client has already been tested, the person is bound to tell the insurer.

So insurance companies are learning whether some of their clients are genetically predisposed to getting certain diseases, often the diseases covered by critical illness insurance.

Yann Joly, project manager at the public law research centre at the University of Montreal, said there's too much secrecy around the methods insurance companies use to determine their rates, especially when it comes to genetics.

"It's not a transparent profession, insurance, so it's very hard to know what they actually do with the information," he said.

Lump-sum payment

A critical illness policy typically gives the client a lump-sum payment, once they've lived for 30 days after the diagnosis.

It's only been available in Canada for about 20 years, but is becoming more popular because medical science has developed to the point where many diseases are diagnosed early and people need money to get through their treatment.

It covers such things as strokes, heart attacks and some types of cancer or diabetes.