By Khabar Rojana 
Finance Minister Nirmala Sitharaman said all individual life insurance policies, whether term life, ULIP or endowment policies and subsequent reinsurance are exempt from GST.
All individual health insurance policies, including family floater policies and policies for senior citizens and reinsurance thereof, will also be exempt from GST, she said. Announcing the outcome of the 56th GST Council meeting, Finance Minister Nirmala Sitharaman said all individual life insurance policies, whether term life, ULIP or endowment policies and subsequent reinsurance are exempt from GST. Since its inception in July 2017, a GST rate of 18 per cent has been levied on premiums paid for health insurance and life insurance. Sitharaman also said that all individual health insurance policies, including family floater policies and policies for senior citizens and reinsurance will also be exempt from GST. The changes will come into effect from September 22, 2025.
How Much You Will Save on Premium
Let’s understand this with an example. If you are paying a premium of around Rs 15,000 (including 18 per cent GST) for a health insurance of Rs 25 lakh, it will now come down to Rs 12,800. This means a person would save around Rs 2,500 on their premium amount once these new GST reforms come into effect.
Similarly, if you were paying Rs 10,000 for a Rs 1 crore term insurance, it will come down to around Rs 8,500. So a consumer will save around 1,500.
Here’s What Experts Have To Say
According to experts, this move is a bold step towards making insurance more affordable.
“We sincerely thank the government for this monumental decision to remove GST from life and health insurance. It sends across a clear message that health and life insurance are critical products for the economy and hence, they are now GST exempt. Especially, term insurance is a highly crucial product and this move will positively impact the whole category in an unprecedented way. By easing the financial burden at a time when healthcare costs are steadily rising, this decision lowers the entry barrier for millions of Indians to secure their wellbeing and financial future. This move is aimed at promoting financial inclusion, protecting vulnerable households, and creating a culture of long-term security. It will be remembered as a progressive reform that brings reassurance to countless families, while also ensuring product innovation across the board and energising the insurance industry to reach deeper into the heart of India.” – Sarbvir Singh, Joint Group CEO, PB Fintech.
“The GST Council’s decision to exempt health insurance premiums while allowing insurers to utilise input tax credits is a landmark step that combines consumer benefit with industry growth. This reform will make health protection more affordable for millions of families, senior citizens, and small businesses who often find premiums to be a stretch. By lowering the cost of entry, it encourages more individuals to seek coverage earlier, thereby strengthening the risk pool and improving the long-term resilience of the insurance sector. Insurance is not just a financial product but a safeguard for households against rising healthcare costs and unforeseen emergencies, and this measure will help embed it more deeply into financial planning. We view this as a forward-looking reform that creates a win-win scenario for both consumers and insurers, and one that will contribute meaningfully to the journey of building a healthier and more financially secure India.” – Rakesh Jain, CEO, Reliance General Insurance.
“The GST Council’s decision to reduce tax on the healthcare sector marks a transformative step toward greater affordability and inclusivity. At a time when India’s healthcare market is poised for significant growth, this reform acts as a timely catalyst to strengthen the ecosystem by addressing one of the biggest barriers to quality healthcare affordability. Whether it is making life-saving drugs more accessible or lowering the cost of health insurance, the move directly tackles a long-standing challenge and will enable millions of families to take a crucial step toward financial and medical security. For the health insurance sector, this change comes at a pivotal moment. As India’s healthcare needs expand and medical risks evolve, the importance of universal health coverage has never been more evident. Health insurance is not merely a financial product, it is a lifeline that protects families, supports well-being, and builds resilience against future uncertainties.” – Naveen Chandra Jha, MD & CEO, SBI General Insurance.