Does illness contracted after taking insurance affects claim or renewal?

Understand how the material change clause works, whether new health info can raise premiums, affect claims, or change your renewal terms. Experts break it down clearly for policyholders.

Health insurance renewals are usually routine, you pay the premium and the policy continues. But many insurers now include

 

a “material change” clause, asking customers to report any new illness or lifestyle change every year. This has left policyholders worried. Can insurers use these disclosures to increase premiums, add exclusions, or reject claims?

 

Experts break down what this clause actually means and what your rights are under IRDA rules.

 

What the ‘material change’ clause means

The clause essentially asks customers to update insurers about major changes in health or lifestyle at renewal. 

Hari Radhakrishnan, expert at the Insurance Brokers Association of India (IBAI), explained that insurers expect policyholders “to notify the company in writing of any material change in risk at each renewal”.

 

However, he emphasised that IRDA guarantees lifetime renewability, prohibits claim-based loading and does not allow fresh underwriting at renewal.

 

Expanding on why insurers use this clause, Ankita Srivastava, general manager (growth and strategy) at The Healthy Indian Project (THIP), said it helps insurers “keep policies fair, transparent, and correctly priced for everyone”, since new health risks affect the pricing pool.

 

 Does non-disclosure cause claim rejection? Experts differ

Srivastava shared an industry case of a customer who developed thyroid issues mid-policy but didn’t disclose it during renewal because she thought it was minor.

 

“When she later filed a related claim, the insurer flagged the long-term medication and partially rejected the claim,” she said.

 

However, Radhakrishnan stated that under IRDA rules, “Illnesses contracted after taking insurance and renewed continuously without break have to be covered”, adding that fresh waiting periods cannot be imposed and non-disclosure alone cannot justify rejection.

 

Nitin Deo, chief technical officer, Zuno General Insurance, also clarified that nondisclosure cannot lead to claim rejection “unless there is proven fraud or deliberate misrepresentation”.

 

Can insurers use this clause to hike premiums?

All three experts agree: No, not for individual policyholders.

 

Deo said insurers are not allowed to change premiums or alter coverage at renewal unless those changes come through an approved product filing applied uniformly across all customers.

 

“Fresh underwriting is only permitted if there is an increase in the sum insured,” he said.

 

Radhakrishnan added that while the clause still exists in many policies, “insurers may not resort to invoking it” due to the negative attention.

 

So what should policyholders do at renewal?

Guidance differs slightly, but the core message is clarity and caution.

 

Srivastava advises customers to be “fully honest and complete every detail”, stressing that minor updates rarely impact premiums and nondisclosure causes more trouble than disclosure.

 

Radhakrishnan offers a more guarded view, customers should first “seek the purpose for which such information is being asked” and share it only if it leads to better benefits or discounts. If any issue arises, he recommends escalating through Bima Bharosa or the Ombudsman.

 

Deo noted that IRDA “does not mandate customers to disclose new illnesses” at every renewal unless they seek a higher sum insured.