What type of information can potentially change a party's decision regarding a contract?

Material information is crucial in the context of contracts as it refers to facts that significantly impact a party's decision-making process regarding entering into or adhering to the terms of a contract. In the realm of insurance, this includes details such as the policyholder’s health status, lifestyle choices, or any prior claims history. If any of these elements were known or disclosed, they could influence the insurer's terms or premiums, as well as the insured's willingness to proceed with the agreement.

For instance, if a potential policyholder has a pre-existing condition that is not disclosed, it can lead to complications later if claims arise related to that condition. Hence, material information has a direct bearing on the trust and transparency between parties and ensures that both sides can make informed decisions. This is why understanding material information is essential in the formation and execution of contracts, particularly in the sensitive area of insurance, where consequences can be financially significant for both the insurer and the insured.