Zero GST on health insurance plans sparks 38% surge in demand: Report
- IBEF
- October 31, 2025
The government’s move to remove Goods and Services Tax (GST) on health insurance plans has led to a sharp increase in demand, with overall uptake for higher coverage surging by 38%, according to Policybazaar. The report found that consumers are prioritising financial protection against escalating medical costs, with the average health insurance cover rising from Rs. 13,00,000 (US$ 14,659) to Rs. 18,00,000 (US$ 20,297). Nearly 45% of buyers are now opting for policies in the Rs. 15,00,000-25,00,000 (US$ 16,914-28,191) range, while only 18% prefer coverage below Rs. 10,00,000 (US$ 11,276). The Central government’s GST exemption, effective from September 22, 2025, was aimed at making life and health insurance more affordable by removing tax on premiums.
The report also revealed a behavioural shift across age groups and geographies. Millennials and senior citizens are increasingly purchasing high-value plans, with elderly buyers (aged 61-75 and above) showing an 11.54% increase in high-sum insured policies. Tier-II cities have witnessed a notable drop in low-coverage preference, with demand for Rs. 15,00,000-25,00,000 (US$ 16,914-28,191) coverage up by 10.2%. Add-ons such as Day-one Pre-Existing Disease and critical illness coverage are also gaining traction. Policybazaar noted that the zero-GST policy has emerged as a strong catalyst for health insurance adoption, reflecting growing consumer awareness of the need for comprehensive financial protection.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Partners
