The onset of the AIDS epidemic has caused health and life insurance companies to assume large unanticipated costs. Some insurers have tried to limit these costs by denying financial responsibility after an insured person is diagnosed as having AIDS. Other insurers have expanded clauses that exclude payment for pre-existing conditions and have applied them to policyholders who exhibited any medical ailments before being diagnosed as suffering from AIDS. A growing number of insurers have tried to limit their future liability for AIDS by rejecting applications from individuals thought to be gay or bisexual or by refusing to issue group policies to employers who allegedly employ large numbers of gay people. Moreover, many insurers are attempting to learn the HIV antibody status of applicants for insurance and are rejecting the applications of those who test positive. The insurance industry should not attempt to reduce its costs by underwriting procedures that discriminate on the basis of sexual orientation and HIV testing. Instead, it should find ways to reduce costs for AIDS patients. Moreover, the insurance industry should not shift the burden of paying for AIDS victims to the Federal Government. 128 footnotes.