No-GST rule fuels 2.5x jump in term plans, 2.2x surge in health cover demand
- IBEF
- October 16, 2025
The government’s decision to remove the Goods and Services Tax (GST) on health and term insurance has led to a sharp spike in demand, with term insurance purchases rising 2.5 times and health insurance demand up 2.2 times since the early September 2025 announcement, according to Policybazaar. The platform reported that this surge surpasses even pandemic-era peaks, with continued high interest weeks later. Industry analysts attribute the jump to reduced costs, as the 18% GST previously levied on premiums had long been a deterrent for cost-sensitive consumers. Executive Director and designated Joint Group Chief Executive Officer, PB Fintech, Mr. Sarbvir Singh, said the reform converted latent demand into active interest, adding that the move reinforces the government’s message that health and life insurance are essential, not optional, financial products.
Experts see the GST waiver as a structural catalyst for insurance inclusion in India, where penetration remains below the global average. The reform makes basic protection more affordable for middle-income families. It aligns with the government’s goal of enhancing social security. Policybazaar identified three key consumer segments driving the trend: active buyers expanding coverage, procrastinators finalising long-delayed purchases, and first-time buyers encouraged by lower costs. The timing of the exemption during the Navratri season also boosted uptake, as consumers viewed it as an auspicious period for new investments. Collectively, the move marks a significant step toward financial protection and inclusive growth, deepening India’s insurance culture.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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