GST Relief on Life & Health Insurance: Premiums Will Get Cheaper

The GST Council has announced a major relief for policyholders: it will exempt all individual life and health insurance premiums from GST starting September 22, 2025. Earlier, insurance providers charged 18% GST on premiums, which increased the total cost for individuals.

Which Insurance Policies Are Affected?

This exemption covers all individual life insurance plans, including:

• Term life insurance
• Endowment plans
• Unit Linked Insurance Plans (ULIPs)

It also covers health insurance plans, such as:

• Family floater plans
• Senior citizen health plans
• Individual health policies

Insurers will not charge GST on related reinsurance services either.

How Much Can You Save?

Removing the 18% GST reduces premium costs significantly. For instance, a ₹15,000 annual premium can save you approximately ₹2,700 per year.

Some experts warn that insurers might face higher costs due to losing Input Tax Credit (ITC). As a result, certain premiums could rise slightly by 1–4%, depending on the insurer.

Why This Matters

The government aims to simplify GST and lower the tax burden on essential services. Lower premiums encourage more people to purchase life and health insurance, which improves financial security for individuals and families.

Tips for Policyholders

1. Review your existing policies to estimate your potential savings.
2. Compare insurance plans after the GST exemption.
3. Consider topping up coverage or buying a new policy to benefit from lower costs.

In conclusion, most policyholders will enjoy reduced premiums, making life and health insurance more affordable and accessible.