Health Plan: Material Change Clause

The 'material change' clause in health insurance policies has recently become a source of confusion among policyholders. The provision says that individuals should inform insurers of any significant developments regarding health conditions or any new illnesses after purchasing the policy. Many policyholders fear that such a disclosure will automatically mean a hike in premiums or a reduction in coverage.

- Meghna Maiti

However, a recent clarification from general insurer ICICI Lombard and regulatory guidelines by the Insurance Regulatory Development Authority of India (Irdai) state that such fears may be largely unfounded, as the material clause cannot be used to penalise policyholders for developing a health condition.

WHAT DOES IT ENTAIL?

The clause requires that policyholders inform insurers of significant health changes (such as a new illness or condition) after they have purchased the policy, especially at the time of renewal.

However, regulatory guidelines bar insurers from selectively raising premiums or curtailing coverage based on such disclosures.