The thing you need to consider when you give data to a company is not "will these people misuse this", but "once these guys go bankrupt and sell the data to the highest bidder, can it be misused?". See, for example, how if your company holds a large mailing list, it will typically be sold to a spam operation for a few bucks.
The minimum standard for giving serious personal information, like your DNA, to a company needs to be that the company receives a limited-time license to handle the data for the purposes they need to provide the service, and absolutely nothing more.
I agree with your limited license idea. It's just not ok that something like that can be dischargeable in bankruptcy. We don't have the ability to refuse consent in the first place, if our family provide it.
But where your parents have different SNPs, there's no way to derive which of them you inherited. What you said is a bit like saying that, because you know all of the cards in a deck of playing cards, you know what hand someone is holding, except in a counterfactual world where there are 10,000 possible cards and you know that a deck only has 52 of them.
People have a right to privacy from imprecise yet correct information about themselves. Someone wouldn't want to explain an abusive parent to a prospective employer, but they could see a strong tendency to, schizophrenia, with DNA data leaks.
This would depend on the terms you agreed to at the time you signed the account and submitted your data. I'm aware a lot of companies like to bury marketing disclosures under a busload of T&Cs. But if you didn't agree having your marketable data allowed to be sold the sale the to creditors can't backdoor it in. They can only reach out to you to opt into new terms, which you should refuse.
I'm completely uninformed in this area. Is there precedent for anything like this in the modern day?
Genetic information is also controlled by other laws such as GINA. So it is already some of the most controlled health data there is. But that's not a very high bar in the US.
It's not even really that unreasonable, if they want to advertise that they can provide health information, they don't get to pretend that they don't.