The study, led by Dr Paul Bennett at the University of Edinburgh and Professor Susan J. Smith at the University of Durham, says that the proportion of applicants refused cover outright is also more than generally believed, at 1.5 rather than one per cent. Researchers found enormous variability between companies when it comes to how many policies are 'rated' for heavier charges.

Between none and 18 per cent of policies had higher premiums for people experiencing or at risk of developing a variety of health conditions. There were similar differences in how many applications were declined - between 0.25 and six per cent.

Dr Bennett said: "Our project arises from growing concern about uneven access to financial services, especially those offering protection to individuals and families at a time when state safety nets are thinning out.

"There are also worries that new developments in bioinformation, especially around human genetics, could increase this social and financial divide."

The researchers acknowledge that selling life insurance does depend on health discrimination. But Professor Smith said: "Although UK insurance underwriting is generally rigorous, the question is where - as well as how and why - to draw the line."

The study found that 78 per cent of insurers now routinely package life and critical illness cover, and more than 53 per cent roll life insurance into a wider mortgage protection service.

Professor Smith said: "It is these insurers who draw the line most tightly, perhaps reflecting the fact that more health information is gathered to underwrite packages than for life insurance alone.

"Nine in 10 insurers say they routinely refer to this extra health information when assessing the life insurance component.

"It seems that the more information insurers collect, the more likely they are to rate policies - a situation with implications for the use of genetic test results."

The voluntary moratorium on their use, except where cover is more than 500,000 and the test has been approved by the Department of Health's Genetics and Insurance Committee, was recently extended until 2011.

There are moves in the life insurance industry for greater transparency, but concern about how to regulate once the moratorium ends.

Dr Bennett said: "Public participation in this debate is limited because genetic science is complicated and insurance is not a hot topic. But participatory techniques developed in our study showed that such problems can be overcome." The Edinburgh 'citizens' jury' - a cross-section of 13 ordinary people - spent three days deliberating on policies for managing genetic testing and insurance.

After hearing expert evidence, cross-examining witnesses and deliberating amongst themselves, 10 were in favour of legislation to prevent insurers accessing test results. Two voted for the moratorium to be extended, and just one for insurers to have access in the same way as for other health tests. But it was not just the verdict that interested researchers.

Professor Smith said: "It is striking how much importance the jury attached to fairness and trust, and how determined they were to develop policies that protect people against genetic discrimination and financial exclusion.

"Not only did they not trust a voluntary moratorium; they did not trust the Government to support adequately those left excluded if insurers had access to genetic test results.

"People opted for legislation because they wanted a system they could trust to be fair."

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