GST exemption lowers insurance cost but fails to boost sales

Newz Desk, Durgapur: The implementation of nil GST on individual health and life insurance policies has not led to a significant surge in sales. But it has shortened the decision-making time for customers, insurance distributors said.
Most of the recent insurance sales have come from pent-up demand and policy issuances that were delayed between the announcement of the exemption and its roll-out. The industry maintains it is still too early to establish a clear trend.
“It is too early to speak of a trend. There is a good flow of enquiries and purchases by people who had completed their analysis but were waiting till September 22 to buy policies. People are not rushing just because of the rate reduction. However, GST reduction is helping those in advanced stages of discussion to make payments faster. It is speeding up the decision-making process,” said Saurabh Vijayvergia, co-founder & CEO of Insurtech Platform Coversure.
In September 2025, the GST Council exempted all individual life insurance policies, including term, unit-linked, and endowment plans, and their reinsurance. The exemption was aimed at making insurance affordable and expanding coverage. The exemption also extended to individual health insurance products.
Most insurers have announced that they are passing on the full benefit of the GST reduction to policyholders until products are repriced. While the GST change has not caused a sharp rise in sales, it has nudged customers who were awaiting premium rationalisation to purchase policies and even opt for higher coverage.
Speaking to journalists, Vaibhav Kathju, founder of Inka Insurance, said premiums have not been revised and the benefit is being passed entirely to consumers. “Although people do not rush to buy insurance solely due to GST changes, the move has nudged those close to a decision,” said Kathju.
He said, people who previously did not view insurance as essential are still not buying policies. “Overall, the price change has accelerated decisions for some, but it will take more time to gauge the full impact. Going forward, with affordability increasing, we expect people to buy policies with larger cover,” said Kathju.