In a major pro-consumer reform, the GST Council announced on 3rd September 2025 that individual life and health insurance policies will now attract 0% GST, down from the earlier 18%.

This move takes effect from 22 September 2025, and is expected to significantly reduce insurance premiums, making protection more affordable for millions of Indians.

What does the 0% GST mean for you?

Until now, insurance premiums attracted steep GST rates of 18%! From 22 September 2025 this will be 0%!

This translates into a direct saving on premiums. For example, a ₹10,000 premium will now cost exactly ₹10,000 instead of ₹11,800.

Why this matters: The protection gap

India has long struggled with low insurance penetration:

• Less than 4% of Indians have individual health insurance.
• Many families remain just one hospitalisation or untimely death away from financial distress.
• High premiums are a key barrier for many middle-income and low-income households.

With premiums falling by up to 15%, more people are likely to:

• Buy their first life or health policy
• Opt for higher coverage or longer policy terms
• Cover senior citizens or children in family floaters

This reform is a step forward in narrowing India’s protection gap.

The impact of GST exemption

On insurers:

Premiums fall = greater demand

New customers enter the market

Insurers may face short-term margin pressure, especially in retail health, due to repricing delays (12–18 months). But higher volumes may offset this.

On the government:

In FY24, India collected ₹16,398 crore in GST from insurance:

• ₹8,263 crore from health insurance
• ₹8,135 crore from life insurance
• ₹2,045 crore from reinsurance

This move represents a major revenue sacrifice, but also a clear policy shift toward financial inclusion.

The reform also removes GST from reinsurance premiums, helping insurers manage costs, and potentially pass on more savings.

What customers should do next

1. Don’t delay: If you’ve been postponing a health or term plan, this is your time.
2. Upgrade your cover: Use the premium savings to increase your sum assured.
3. Add family members: Consider covering parents or children under one floater.
4. Review existing policies: Talk to your agent/broker about upgrading post 22 Sept.

The best time to insure is…

From 22 September 2025, individual life and health insurance will officially be GST-free.

✅ More affordable

✅ More accessible

✅ More essential than ever

There has never been a better time to secure your family’s future. Don’t wait. Insure smart – starting 22 September 2025.

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