Life Insurance
0% GST on Health and Life Insurance – Making Protection More Affordable
The Government of India has announced a major reform that will make insurance more affordable for millions of people. Starting September 22, 2025, all individual health and life insurance policies are completely exempt from Goods and Services Tax (GST). Earlier, policyholders had to pay an additional 18% GST on premiums—this has now been reduced to 0%.
This decision, taken at the 56th GST Council Meeting chaired by Finance Minister Nirmala Sitharaman, aims to increase insurance accessibility and encourage more Indians to secure their future.
What Has Changed?
| Particulars | Earlier (Before Sep 22, 2025) | Now (From Sep 22, 2025) |
| GST Rate on Health Insurance | 18% | 0% |
| GST Rate on Life Insurance | 18% | 0% |
| Impact on Premiums | Higher due to GST | Lower, more affordable |
Why This Move is Important
1. Lower Premium Costs
With no GST, the premium amount you pay will directly contribute to your insurance cover. For example, if your annual premium was ₹25,000 earlier, you would also pay ₹4,500 as GST (18%). Now, you save that extra cost.
2. Encourages More People to Buy Insurance
By removing GST, the government is making insurance more attractive and accessible, especially for middle-class families.
3. Boost for the Insurance Industry
This reform is expected to increase demand for insurance policies, benefitting both customers and insurance companies. In fact, soon after the announcement, stocks of leading insurers like LIC, HDFC Life, and ICICI Prudential rose by 4–6%.
How Customers Benefit
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Health Insurance:
Families can now buy health cover at a reduced cost, making medical protection more affordable.
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Life Insurance:
Term plans, endowment policies, and other life insurance products become cheaper, encouraging long-term financial planning.
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Extra Savings: Customers save thousands of rupees annually, especially on high-value policies.
Expert View
Industry experts have welcomed this decision, calling it a “game-changer for insurance penetration in India.” With rising healthcare costs and financial uncertainties, this move will help more households safeguard their health and future without worrying about tax burdens.
Final Thoughts
The removal of GST on individual health and life insurance policies is a landmark reform that will benefit policyholders across the country. It’s not just about saving 18% on premiums—it’s about making financial protection accessible to every Indian family.
