Good news! Now Pay 0% GST on Your Health and Life Insurance Policy Starting 22nd Sep’25

Recently, the Government announced a landmark decision on a new GST structure following its 56th GST Council meeting - news that has shaken the nation.

According to the Government, from the perspective of the people, they have reduced the GST percentage on many products. It has been a big win, especially for Health and Life insurance policyholders, the reason being that there will be 0% GST on individual Health and Life insurance premiums, down from the previous 18%. The changes have come to effect from 22nd September, 2025.

With the announcement, it is time for all policyholders to review their premium charges as they are bound to make some savings. And if you are planning to get a new policy or even update an existing one, you should check the new policy terms before buying.

Let’s find out how the GST exemption on Health and Life insurance premiums will affect policyholders and what things you should consider the next time you are paying a premium or going for a new policy.

How this GST Cut Benefits you?

As per the announcement, on and after 22nd of September, 2025, the GST on Health insurance ( individual plans, family floater plans, and senior citizen plans) and life insurance (ULIPs, term life, and endowment plans) will come down to nil (0%) from the high GST rate of 18%.

The following table will give you a better understanding of the tax reduction.

Let’s take an example of Anuj, 35 year old healthy male, who buys Pramerica Life Smart Invest 1 UP, a Unit Linked Life Insurance Plan, with a premium of Rs.10,000/month, 10 year Premium Paying Term and 20 year of Policy Term.

Anuj will now enjoy extra total benefit of Rs. 1,15,941 after the GST cut.

*100% allocation to Pramerica Nifty Mid Cap 50 Correlation Fund (SFIN:ULIF017260423NIFMIDICOR140)
Fund Value in Benefit illustration is @8%. Pramerica Life Smart Invest 1 UP UIN:140L084V01

This is a great example that demonstrates how the GST cut translates into tangible financial gains. Simply put, it means more money for policyholders.

Whether you're planning for your family's future, building wealth, or securing long-term protection, this GST reduction makes it easier for you to achieve your goals, faster.

NOW is the perfect time to consider your options and to buy the right life insurance policy!

How Does This GST on Life And Health Insurance Affect Policyholders?

The Government’s revised GST framework has been introduced with the middle class in focus. The aim is to make essential protection products more affordable while encouraging consumption and supporting ease of business.

Exempting Health and Life insurance premiums from GST is expected to create these clear advantages:

• More savings for you: With this nil GST reform on insurance plans, policyholders would be able to save more money. You can now further invest these savings and increase your coverage or have more savings for your family.

• More people can afford insurance: Majority of Indians do not have Health or Life insurance. With the current change in GST slabs, more people will be able to afford insurance, and hence, it can bridge the protection gap in India.
  

What Policyholders Should Do?

As a policyholder, you should look into the following:

• Review Current Policies: Check the renewal dates of your Health or Life insurance policies. For renewal premiums due after 22nd September 2025, make sure that your insurer has adjusted the premium to reflect GST changes. 

• Buying a new policy: If you are planning to buy a new policy, now is the perfect time as you will enjoy the GST benefit.

• Consider Increasing Coverage: With the savings on GST, you might be able to afford a higher sum insured, which comes with better comprehensive plans. You can also include additional riders that were earlier skipped.

Frequently Asked Questions (FAQs)

1. When will life insurance be exempt from GST?
The announced GST reduction has been in effective from 22nd Sep 2025.

2. What is the new GST rate on insurance premiums?
The GST rate has been reduced to 0% for individual life insurance policies including Term Plans, ULIPs, and Endowment Policies.

3. Which categories of life insurance policies qualify for GST exemption?
All policies issued to Individual retail customers are exempted from GST including:
a. Retail Term
b. Endowment (Traditional)
c. ULIP
d. Health and riders
e. Annuity/pension

4. Will existing policyholders benefit from this GST cut?
Yes existing policyholders will benefit from this cut however the GST change will only be applicable on premiums paid on or after the date of 22nd September 2025.

5. Will group or corporate insurance policies also have 0% GST?
No. The exemption currently applies only to individual Life and Health insurance policies.

6. What if I have submitted post-dated cheques or pre authorised bank transfer for my premium?
If you are a Pramerica Life Insurance policyholder, your new premium amount will be automatically adjusted in case your premium is due on or after 22nd September 2025. Reach out to your Relationship manager or life insurance agent for more details.

Conclusion

The shift from 18% GST to 0% on individual Health and Life insurance premiums has come into effect from 22nd September 2025. This significant change aligns with two key objectives: the IRDAI's vision of ‘Insurance for All by 2047’ and the goal of reducing the ‘protection gap’ and making insurance accessible to all. It reduces the premium burden and makes insurance more affordable, thereby increasing the likelihood of insurance uptake.

If you have a renewal coming up or are planning to buy a policy, now is a good time to review your options, demand revised quotes, and ensure you get the benefit of this GST exemption.