Material Clause in Health Insurance: This new rule is causing a stir among health insurance providers. Many companies are now asking customers for new health information when renewing policies, raising concerns about increased premiums and stalled claims. But let’s find out the real picture.
Health Insurance: We often take out health insurance quickly, but we don’t pay much attention to the rules that apply each year when renewing it. Recently, many companies have started asking people if there have been any major changes in their health when renewing their policies. This raises the question: will this increase the premium? Could the company suspend claims or renewal altogether? This is why the “material change” clause is now in the news.
What is this material change clause?
Some insurance companies are now asking, when renewing policies, whether there have been any new illnesses or major changes in their health since purchasing the policy. This means that any recent illnesses must be disclosed. While not every company has included this clause, some major insurance companies have added it to their policy terms. For example, this is now also included in some health plans of ICICI Lombard, ACKO, SBI General, ManipalCigna, Reliance General, Raheja QuBE, Zuno etc.
Will disclosing a new illness increase the premium?
Many people assume that disclosing a new illness will immediately increase the premium. However, both experts and companies are saying the opposite. The Economic Times quoted Nitin Gupta of ACKO as saying that if you are simply renewing an old policy, there’s no need to disclose a new illness. ICICI Lombard also says that despite the material change clause, the addition of a new illness will neither increase the premium nor change the coverage.
When does fresh underwriting occur? Understand it here in simple terms.
According to IRDAI, companies can only re-examine your health if you are increasing the coverage (sum insured), adding a new rider, or porting the policy to another company. If you are renewing the same old policy without any changes, the company cannot do anything based on disclosing a new illness.
IRDAI rules regarding policy renewal
According to the regulator (IRDAI):
- Your health policy cannot be denied renewal for life.
- Renewal cannot be denied simply because you previously filed a claim.
- Companies are not permitted to conduct a second health checkup unless you increase the sum insured.
This means that even if the policy contains a material change clause, IRDAI’s rules are stronger, and companies cannot violate them.
Should you disclose a new illness or not? This is the correct answer.
Experts say that if you are not making any changes to the policy, but only renewing it, there is no need to disclose a new illness.
Medical information is only required to be disclosed at the time of policy purchase and upgrade. This means that disclosing a new illness during annual renewal is neither within IRDAI’s rules nor your responsibility.
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