New Delhi. The impact of the recent GST reforms of the government is now clearly visible in the insurance sector as well. Like real estate, auto and MSME, now the insurance industry has also got a big relief. After the end of GST on health insurance, people’s interest in insurance plans has increased rapidly. According to a report by Policy Bazaar, there has been a 38 percent increase in demand for health insurance coverage.
The report shows that after the removal of GST, people are now preferring to take health insurance plans with higher coverage. While earlier the average insurance coverage was ₹13 lakh, now it has increased to ₹18 lakh. That means customers are now giving priority to complete financial security instead of minimum security.
These plans are becoming more popular
After GST exemption, about 45 percent customers are now choosing plans with coverage of Rs 15 to 25 lakh. About 24 percent people are taking plans in the Rs 10-15 lakh limit, while only 18 percent customers are choosing options with coverage less than Rs 10 lakh.
New rule comes into effect from 22 September 2025
The Central Government has completely abolished GST on health and life insurance premiums from 22 September 2025. This decision was taken as part of the rate rationalization process, so that insurance plans can become accessible and affordable for common consumers. Now people do not have to pay any tax on their insurance premium.
Increased awareness among small towns and elderly
According to the report, the inclination towards high coverage plans has also increased among the people of Tier-2 cities. In these cities, the share of plans with 15-25 lakh coverage has increased from 44.1% to 48.6%. At the same time, the share of plans with coverage less than Rs 10 lakh has come down to 16.8%. There has been an increase of 11.54 percent in the demand for high coverage plans among people aged 61 to 75 years and above. This means senior citizens are now choosing higher amount coverage to protect themselves from rising medical expenses.
