Families To Save 15% Instantly! Why Sept 22 Is A Historic Day For Insurance Buyers In India?

GST on individual life and health insurance policies will not be applicable moving forward from 22nd September 2025. In fact, this will greatly benefit all the people in the country, and so it is definitely a good thing.

These include term life policies, unit linked insurance policies (ULIPs), endowment policies, family floater health insurance, and senior citizen health plans, along with their reinsurance.

For instance, let's take an example to better understand this as per Dr. Sabine Kapasi, CEO at Enira Consulting Pvt Ltd, Founder of ROPAN Healthcare, and UN Advisor. Suppose a person is paying Rs 50,000 every year, the amount payable will be Rs 59,000 since there is a gain of Rs 9,000 owing to the GST. With the exemption, the policyholders pay only the base premium. This is a cost reduction of approximately 15%. It is this difference that allows many families to get the coverage that is so desperately needed for medical emergencies.

"Much like other countries, universal health coverage is still a challenge in India. Approximately 30% of the population, or 40 crores, do not have any form of coverage. The 14% annual increase in medical expenses makes the gap harder to close. Families that are already struggling do not only have to pay for the ever-increasing cost of insurance premiums but are also bound to pay taxes," said Dr. Sabine Kapasi.

Middle-income families are in a precarious situation where their basic needs and their health coverage are competing. The GST exemption directly fixes this problem, making it easier for people who need insurance to get it.

It is also important to note the significant work done by the government. Financially disadvantaged groups have benefited immensely from programs like the Ayushman Bharat, Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) and Rashtriya Swasthya Bima Yojana (RSBY). Along with the current changes, they will further help in the expansion of coverage.

"However, what we need to understand is that the challenges still prevail. Many families continue to face high medical expenses in spite of these efforts. Out-of-pocket costs still make up almost 45% of health spending, which is one of the highest percentages in the world," Dr. Sabine Kapasi added.

Moreover, the so-called "missing middle," who are basically the people who make enough money to get help but cannot meet the cost of private insurance, still do not have much protection. Higher-income groups have mostly used insurance. Thus, the government is breaking a major barrier for this group by taking GST off of premiums. The exemption can help more families feel financially secure, along with things like higher Section 80D deductions and better control of medical inflation.

While India is making efforts to ensure that everyone has access to healthcare, there are still gaps that need to be filled in. With GST exemption at play, the cost of insurance has certainly been lowered for families, which will also help facilitate individuals to obtain the necessary coverage. This move, when united with government initiatives, can help those who have been left behind, ease financial strain, and move the nation closer to universal access to healthcare.

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