Modify mesh collision and material ONLY within some overlap

I want to replicate the effect I saw in “Kao the Kangaroo” game (gif below). It looks like they create a sphere collision around the crystal carried by the player, and it modifies the meshes to partially change their collision (disabled → enabled) and material. Some things to note:

  1. This only affects the part of the mesh which overlaps with the collision.
  2. Other characters are affected by the collision changes.
  3. It doesn’t matter if the camera is inside or outside the sphere overlap.

Kao is made in Unreal so there must be a way to do this, but how?
kao

I think there’s a confusion here. Collision is not restricted to be either enabled or disabled. There are different collision channels. You can adjust how should an object respond to different collision channels by navigating to the details window while your object is selected, changing the “Collision Presets” setting to custom, expanding it and selecting the desired responses for each object channel

Yes, I’m aware of that, I just used simpler terms to describe it. My problem is setting a different collision (and material) on a PART of a mesh, specifically the part overlapped by an overlap. Something like controlling each vertex of a complex collision individually.