What action can an insurer take upon discovering a proposed insured has AIDS during underwriting?

The appropriate course of action for an insurer upon discovering that a proposed insured has AIDS during underwriting is to refuse to issue a policy based on positive HIV test results. This is because insurers assess risk when underwriting life insurance policies, and a medical condition such as AIDS could significantly influence the risk level. Insurers use this information to make informed decisions about coverage and premiums.

When an insured is diagnosed with a condition that typically carries a higher mortality risk, it is within the insurer’s rights to deny coverage to protect their financial interests. This practice is standard in the insurance industry to ensure that they can manage risk adequately and maintain the integrity of the risk pool.

The other actions presented—sharing test results with the applicant's immediate family, disclosing information to the Center for Disease Control, or discriminating between individuals of the same class—are either violations of privacy, ethical standards, or legal regulations. Insurers must maintain confidentiality of the applicants' medical information and treat all applicants with fairness and respect, ensuring that they adhere to applicable laws and regulations relating to discrimination and privacy.