The government has exempted all individual life and health insurance policies from GST. The rule starts from September 22, 2024. Reinsurance costs are also included in the exemption.

What Has Changed

• Before: GST on health and life insurance ranged from 1.8% to 18% depending on the policy.
• After: All individual policies, including term life, ULIPs, endowment, and health insurance, now have no GST.
• Example: A health insurance premium of ₹10,000 used to cost ₹11,800 with GST. Now, it costs ₹10,000.

Benefits for Policyholders

• Premiums are cheaper → more people can afford insurance.
• First-time buyers may take policies.
• Existing customers may increase coverage.
• Helps reduce India’s insurance protection gap, especially in health.

Impact on Insurers

• Premiums are cheaper for customers, but insurers lose Input Tax Credit (ITC) on costs like commissions and claims processing.
• Operational costs may rise by 5–7%.
• Some insurers may eventually raise prices 3–4% to balance margins.