New GST reforms have improved transparency and affordability in term insurance. Key benefits include:
The new GST rate on individual term plans lowers premiums. The 18% GST that applied to term plans until 22 September 2025 has been eliminated.
For example, a term insurance policy with an annual premium of Rs. 15,000 earlier cost Rs. 17,700 (Rs. 15,000 + 18% GST).
Under the new GST reform, policyholders now pay only Rs. 15,000, saving Rs. 2,700 annually.
Increased affordability has encouraged low- and middle-income households to opt for term insurance. What was once considered optional is now widely viewed as a financial necessity.
A recent report suggests that the GST reform has increased term insurance adoption by 2.5 times nationwide. Higher affordability has also led first-time policyholders to choose higher sums assured.
Additional riders can now be added to term insurance policies without incurring GST. Previously, riders worth Rs. 5,500 attracted 18% GST, increasing the total cost.
With the 0% GST reform, riders such as critical illness, accidental death, and waiver-of-premium are now significantly more affordable.
Removing GST has simplified premium breakdowns, making it easier for policyholders to understand and compare term insurance plans.
Greater transparency reduces hidden charges and helps build trust between insurers and policyholders, particularly for first-time buyers.