India’s recent GST exemption on health and term insurance premiums has triggered a remarkable surge in demand, industry data shows. According to Policybazaar, term insurance purchases have jumped 2.5 times, while health insurance demand has increased 2.2 times since the government announced the move in early September 2025. This spike exceeds even the peaks observed during the pandemic, with consumer interest remaining elevated weeks later.
Experts attribute the surge to cost reductions, as the previous 18% GST on insurance premiums often deterred cost-conscious buyers. Sarbvir Singh, Executive Director and Joint Group CEO of PB Fintech, noted that the policy change converted previously latent demand into active interest, signaling the government’s commitment to treating health and life insurance as essential financial tools rather than optional products.
Analysts also view the GST waiver as a structural step toward boosting insurance inclusion in India, where coverage rates remain below the global average. By reducing costs, the reform makes basic protection more accessible to middle-income families, supporting the government’s broader social security objectives.
Policybazaar identified three major consumer segments driving the trend. The first group comprises active buyers expanding their existing coverage. The second includes procrastinators finalizing long-delayed insurance purchases, while the third consists of first-time buyers motivated by the lower premiums. The timing of the exemption during the Navratri season further amplified uptake, as many consumers regarded the period as auspicious for initiating new financial commitments.
Overall, the GST exemption represents a major milestone in advancing financial protection and inclusive growth in India. By lowering barriers to entry, the reform encourages wider adoption of insurance, embedding it more deeply into the nation’s financial culture. Insurers and policymakers see the move as a long-term catalyst for promoting responsible financial planning and broadening the reach of social security initiatives.
With insurance becoming more affordable and culturally aligned with key investment periods, India is witnessing a stronger emphasis on securing health and financial futures. The reform is expected to continue influencing purchasing behavior positively, driving both awareness and long-term participation in the insurance sector.
