ANKUR TYAGI
From today, individual life and health insurance policies will no longer carry Goods and Services Tax (GST). This move immediately reduces the burden on policyholders, as these products previously attracted an 18% GST, making them costlier.
Which policies are included?
- Health insurance: Individual health plans, family floater covers, and senior citizen policies, along with their reinsurance services.
- Life insurance: Term plans, ULIPs, endowment policies, and related reinsurance services.
What this means for policyholders
Until now, a premium of ₹50,000 came with an extra ₹9,000 tax, raising the total to ₹59,000. With the exemption effective September 22, the same policy will cost only the base premium—₹50,000 in this example. That’s an annual saving of ₹9,000 straight into the customer’s pocket.
Expert view
“Bringing life and health insurance under the tax-free bracket not only makes critical protection more accessible but also shifts financial planning from mere tax-saving to true wealth and security building,” said Siddharth Maurya, Founder & MD, Vibhavangal Anukulakara Pvt. Ltd. He added that reduced indirect costs will free up money for prevention, recovery, and long-term planning.
Turning savings into investments
Rather than letting this saved amount go unused, policyholders can redirect it into investments. For example, investing ₹9,000 a year (₹750 per month) into a mutual fund SIP earning 12% annually can grow into ₹2.8 lakh in 15 years, and over ₹5 lakh in 20 years—all from what was earlier a tax outgo.
👉 In short: With GST now removed from individual life and health insurance, premiums become lighter, protection becomes wider, and families gain a fresh avenue to channel their savings into future growth.
Abhishek Sinha
