Health Insurance Rules: How Illness Affects Claims and Renewal, and What Your Rights Really Are

Health insurance has become a crucial safety net for families, especially as medical costs continue to rise. However, many policyholders worry about how a newly diagnosed illness might affect their future claims or policy renewal. With insurers increasingly using the “material change” clause, customers are often unsure whether disclosing medical updates could lead to higher premiums or claim rejections. Understanding your rights and the actual rules can prevent confusion and ensure that your coverage remains uninterrupted.

This article explains the impact of new illnesses on claims and renewals, what insurers can and cannot do, and the steps you must take to stay protected under health insurance regulations.

Why Insurers Ask for ‘Material Change’ Information

Many insurance companies now include a material change clause, which requires policyholders to inform the insurer about any significant changes in their health or lifestyle each year.

The purpose of this clause is simple:

• To keep the policy updated

• To ensure fairness in risk assessment

• To avoid disputes during claims

Although this clause may create concerns among customers, it does not give insurers the right to arbitrarily increase premiums or deny valid claims.

Does a New Illness Affect Your Claim or Renewal?

New illnesses reported after purchasing the policy often create confusion. Here’s what experts and regulatory guidelines clarify:

1. New Illnesses Must Be Covered

According to IRDA rules, any illness that develops after a policy is purchased must be covered, provided the policy is active.
Insurers cannot reject claims for such conditions just because they were not previously declared.

2. No New Waiting Period at Renewal

When you renew your policy on time, the insurer cannot impose a fresh waiting period.
This ensures continuity of coverage even if you develop new health problems.

3. Claim Can Be Rejected Only on Specific Grounds

A claim may be denied only if:

• The customer provides false information knowingly

• There is fraud or deliberate non-disclosure

Honest mistakes or newly diagnosed conditions do not justify claim rejection.

Can the Insurance Company Increase Your Premium?

A major concern for policyholders is the possibility of premium hikes after reporting a medical condition. But the rules provide strong protection:

• Insurers cannot increase premiums for individual customers based on their health updates.

• Any premium revision can only be done for an entire category of customers, not selectively.

• Changes in coverage or premium at renewal are allowed only when the sum insured is increased.

This prevents unfair or discriminatory pricing for people who develop illnesses during the policy period.

What Should Policyholders Do?

To ensure smooth renewals and hassle-free claims, customers should follow these essential steps:

1. Be Transparent About Your Health

Always provide accurate information about any major illness or lifestyle change.
Minor conditions usually have negligible impact, but hiding information may create bigger complications during claims.

2. Understand Why Information Is Being Requested

Before submitting details, ask the insurer why specific data is needed.
Share only what is relevant—avoid disclosing unrelated or unnecessary information.

3. Keep Renewals Timely

Renew the policy before the due date to maintain continuity and avoid loss of waiting period benefits.

4. Know Where to Complain

If you face an issue with renewal or claim processing, you can approach:

• Insurance Ombudsman, or

• Bima Bharosa, IRDA’s grievance redressal system

Both platforms help customers resolve disputes fairly.

Final Thoughts

Health insurance is designed to support you during medical emergencies, not create additional stress. By understanding your rights and following the renewal guidelines, you can ensure your policy continues to provide strong and reliable protection. Transparency, timely renewals, and awareness of regulatory rules empower you to secure better service, uninterrupted coverage, and peace of mind—even after a new illness is diagnosed.