Now Is The Time To Buy Insurance Policies…!

No GST on Life and Health Insurance: Will Your Premiums Really Drop?

An Analysis By:
Dr Sunil S Rana

Insurance buyers finally have a reason to cheer! The GST Council has announced that life and health insurance policies will no longer attract Goods and Services Tax (GST). This is being seen as a big relief for millions of households, but the big question is; will your premiums actually come down? Let’s break it down in simple words.

✅ What Has Changed?

Earlier, when you bought an insurance policy; whether health or life; you had to pay 18% GST on top of your premium. For example:

-If your health insurance premium was ₹20,000, you ended up paying ₹23,600 after GST.

-Now, you will just pay ₹20,000.

This exemption applies to:

-Life insurance policies: Term plans, ULIPs, endowment policies.

-Health insurance policies: Family floater plans, senior citizen health policies.

-Reinsurance linked to these policies is also exempt.

In short, whether you are a young professional buying term insurance, a family taking a health policy, or a senior citizen securing health cover, GST will no longer be an extra burden.

Why Is This a Big Move?

For many years, the 18% GST on insurance premiums was both a psychological and financial barrier, especially for middle-class families. People felt insurance was too expensive and kept postponing buying it.

Chetan Vasudeva, Senior VP at Elephant.in, explained it well:

-Removing GST makes policies more affordable.

-It sends a clear message that the government wants to prioritise health and financial protection.

-Insurance penetration in India (the number of people covered) is very low compared to other countries; this step could change that.

Simply put, more families will now find it easier to get insured.

Will Premiums Really Get Cheaper?

Here’s where things get a bit tricky. While removing GST should reduce costs for customers, experts warn that the full 18% benefit may not directly reach you.

Why?

-Insurance companies earlier had something called Input Tax Credit (ITC): a way to adjust the GST they paid on their own expenses.

-With GST gone, they also lose that credit.

-This could mean higher operational costs for insurers, which might prevent them from passing the full savings to you.

Smita Singh, Partner at S&A Law Offices, put it clearly:

-The move is good for accessibility.

-But policyholders may not see the entire 18% drop in premiums, as insurers will adjust prices based on their cost structures.

What Does This Mean for You?

Even if premiums don’t reduce fully by 18%, there will still be visible savings for customers. For example, families paying big amounts for health insurance will immediately feel some relief.

Bankim Mapara, CFO of Universal Sompo General Insurance, highlighted:

-The exemption will make health insurance more affordable and accessible.

-Customers will see the benefit immediately in their bills.

-In the long run, this will encourage more people to secure protection against rising medical costs.

For households that always thought insurance was “too costly,” this could finally be the nudge they need to invest in safety for themselves and their families.

Bottom Line:

The removal of GST on life and health insurance is a bold reform aimed at the common man. While premiums may not fall fully by 18%, the savings will still be meaningful.

-Families will pay less for the same coverage.

-More Indians are likely to buy insurance, reducing the nation’s huge protection gap.

-It is a strong step towards making healthcare and financial security more affordable.

For the middle-class household, this means you can finally secure your family’s future without the extra GST burden. Even partial savings matter when every rupee counts.

So, if you’ve been delaying buying that health or life cover, maybe now is the time to act.