{"id":109903,"date":"2026-04-28T13:43:00","date_gmt":"2026-04-28T13:43:00","guid":{"rendered":"https:\/\/drprem.com\/guide\/?p=109903"},"modified":"2026-04-28T13:43:00","modified_gmt":"2026-04-28T13:43:00","slug":"how-gst-affects-life-insurance-premiums-in-india","status":"publish","type":"post","link":"https:\/\/drprem.com\/guide\/how-gst-affects-life-insurance-premiums-in-india\/","title":{"rendered":"How GST Affects Life Insurance Premiums in India"},"content":{"rendered":"<div class=\"38520354a5201685ddf480eec688e1a7\" data-index=\"1\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block; text-align:center;\"\r\n     data-ad-layout=\"in-article\"\r\n     data-ad-format=\"fluid\"\r\n     data-ad-client=\"ca-pub-9477973674766713\"\r\n     data-ad-slot=\"8885944693\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>Goods &amp; Services Tax (GST) is an indirect tax that came into existence in place of service tax &amp; value-added tax (VAT). It is a destination-based tax that created uniformity in the taxes levied on the supply of goods &amp; services in India. It replaced the cascading effect of multiple-level taxation with a unified system.<\/p>\n<p>It helps determine the cost of financial products, including life insurance. When it comes to <span style=\"color: #0000ff\"><a style=\"color: #0000ff\" href=\"https:\/\/www.hdfclife.com\/insurance-knowledge-centre\/tax-saving-insurance\/gst-and-life-insurance\" target=\"_blank\" rel=\"noopener\"><strong>GST on Life Insurance<\/strong><\/a><\/span>, it is applied on the premium to be paid by the policyholders, having a direct implication on the total amount payable. Hence, it becomes important to gain an understanding of GST to make an informed decision &amp; choose an appropriate plan depending on one&#8217;s requirements.<\/p>\n<p>The life insurance premiums were taxed @18% since it was launched in India on July 1, 2017. But now the GST council has amended the GST to 0% from Sept 22, 2025, where the policyholders are not required to pay any GST on all health &amp; life insurance plans.<\/p>\n<p><strong>Why was this change introduced?<\/strong><\/p>\n<p>The government of India reduced the taxes on life insurance premiums from 18% to 0%, not only for tax relaxation, but to create a system providing financial protection. Let us understand the picture in detail:<\/p>\n<ul>\n<li><strong>To Improve Insurance Penetration<\/strong><\/li>\n<\/ul>\n<p>The life insurance penetration rate, i.e. the ratio of premium to GDP, has been around 4%, whereas in developed countries, it was around 10-12%. Hence, the high cost was one of the reasons to do so.<\/p>\n<ul>\n<li><strong>To Encourage Financial Inclusion<\/strong><\/li>\n<\/ul>\n<p>The government\u2019s vision of \u201cInsurance for all by 2047\u201d includes bringing one household with life or health cover. Hence, by reducing the premium amount, this vision can turn into reality.<\/p>\n<ul>\n<li><strong>To Support the Middle Class<\/strong><\/li>\n<\/ul>\n<p>By reducing the total insurance cost, a middle-class person will now be able to deal with the rising costs &amp; inflation, providing all with financial protection.<\/p>\n<ul>\n<li><strong>To Simplify the System<\/strong><\/li>\n<\/ul>\n<p>Earlier, different insurance types had different taxes applicable, but now, after GST reforms, it has brought a transparent &amp; uniform system across India.<\/p>\n<h2><strong>List of GST rates on different life insurance plans<\/strong><\/h2>\n<p>Provided is the list of GST rates on different life insurance plans:<\/p>\n<p>&nbsp;<\/p>\n<table width=\"779\">\n<tbody>\n<tr>\n<td width=\"180\"><strong>Type of Insurance Plan<\/strong><\/p>\n<p><strong>\u00a0<\/strong><\/td>\n<td width=\"188\"><strong>Earlier GST rate (Before 22 Sep 2025)<\/strong><\/td>\n<td width=\"203\"><strong>How GST was applied<\/strong><\/p>\n<p><strong>\u00a0<\/strong><\/td>\n<td width=\"210\"><strong>GST rate (after 22 Sep 2025)<\/strong><\/p>\n<p><strong>\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"180\">Term Life Insurance<\/td>\n<td width=\"188\">18%<\/td>\n<td width=\"203\">GST was applied to the entire premium amount<\/td>\n<td width=\"210\">0%<\/td>\n<\/tr>\n<tr>\n<td width=\"180\">Endowment\/ Traditional Plans<\/td>\n<td width=\"188\">1st year &#8211; 4.5%<\/p>\n<p>From 2<sup>nd<\/sup> year \u2013 2.25%<\/td>\n<td width=\"203\">1st year \u2013 18% was charged on 25% of the premium amount<\/p>\n<p>From the 2<sup>nd<\/sup> year, 18% was charged on 12.5% of the premium amount<\/td>\n<td width=\"210\">0%<\/td>\n<\/tr>\n<tr>\n<td width=\"180\">Unit-Linked Insurance Plans (ULIPs)<\/td>\n<td width=\"188\">18%<\/td>\n<td width=\"203\">GST was charged on the risk coverage part &amp; the associated charges thereof.<\/td>\n<td width=\"210\">0%<\/td>\n<\/tr>\n<tr>\n<td width=\"180\">Health Plans &amp; Add-on Riders<\/td>\n<td width=\"188\">18%<\/td>\n<td width=\"203\">On the entire premium.<\/td>\n<td width=\"210\">0%<\/td>\n<\/tr>\n<tr>\n<td width=\"180\">Group Insurance Plans<\/td>\n<td width=\"188\">18%<\/td>\n<td width=\"203\">On the entire premium.<\/td>\n<td width=\"210\">18%<\/td>\n<\/tr>\n<tr>\n<td width=\"180\">Pension Plans<\/td>\n<td width=\"188\">1st year &#8211; 4.5%<\/p>\n<p>From 2<sup>nd<\/sup> year \u2013 2.25%<\/td>\n<td width=\"203\">1st year \u2013 18% was charged on 25% of the premium amount<\/p>\n<p>From the 2<sup>nd<\/sup> year, 18% was charged on 12.5% of the premium amount<\/td>\n<td width=\"210\">0%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><strong>Benefits of GST reductions on life insurance premiums<\/strong><\/p><div class=\"38520354a5201685ddf480eec688e1a7\" data-index=\"2\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block; text-align:center;\"\r\n     data-ad-layout=\"in-article\"\r\n     data-ad-format=\"fluid\"\r\n     data-ad-client=\"ca-pub-9477973674766713\"\r\n     data-ad-slot=\"8885944693\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n\n<p>The main advantages of the recent exemption of GST on <span style=\"color: #0000ff\"><a style=\"color: #0000ff\" href=\"https:\/\/www.hdfclife.com\/\" target=\"_blank\" rel=\"noopener\"><strong>Life Insurance<\/strong><\/a><\/span> premiums are:<\/p>\n<ul>\n<li><strong>Increased savings on life insurance premiums<\/strong><\/li>\n<\/ul>\n<p>The reduced GST on the life insurance premium reduced the overall cost, due to which policyholders are able to save more.<\/p>\n<ul>\n<li><strong>Improved accessibility of life insurance<\/strong><\/li>\n<\/ul>\n<p>Due to a lower premium amount, the life insurance has now become easily accessible to a larger segment of people.<\/p>\n<ul>\n<li><strong>Encouragement for first-time policyholders<\/strong><\/li>\n<\/ul>\n<p>Due to reduced taxes, the individuals who never bought insurance will now be encouraged to buy it.<\/p>\n<ul>\n<li><strong>Enhanced coverage within the same budget<\/strong><\/li>\n<\/ul>\n<p>Now, policyholders can consider increasing coverage within the same budget due to reduced premiums.<\/p>\n<ul>\n<li><strong>Promoting nationwide life insurance access <\/strong><\/li>\n<\/ul>\n<p>This amendment will help promote access to life insurance plans nationwide, providing them with financial protection.<\/p>\n<ul>\n<li><strong>Wider reach in rural &amp; underserved areas<\/strong><\/li>\n<\/ul>\n<p>Due to reduced costs, it enables the insurance company to offer more budget-friendly plans in rural areas, providing them with financial security.<\/p>\n<p><strong>Factors to be considered while buying a Life Insurance plan with the new GST rates<\/strong><\/p>\n<p>The factors to be considered while choosing an appropriate life insurance plan are as follows:<\/p>\n<ul>\n<li><strong>Understand your insurance needs.<\/strong><\/li>\n<\/ul>\n<p>Assess the financial requirements, future financial goals, existing liabilities, etc., to consider the life insurance coverage required.<\/p>\n<ul>\n<li><strong>Compare plans &amp; premiums.<\/strong><\/li>\n<\/ul>\n<p>Compare different life insurance plans available in terms of their features, benefits, pricing, coverage, etc.<\/p>\n<ul>\n<li><strong>Choose the right policy type.<\/strong><\/li>\n<\/ul>\n<p>Choose the type of plan required, i.e. ULIPs, term, health, endowment or whole life, considering your financial objectives, risk tolerance level, &amp; investment horizon.<\/p>\n<ul>\n<li><strong>Look at the claim settlement ratio.<\/strong><\/li>\n<\/ul>\n<p>Look for an insurance company that has a high claim settlement ratio, ensuring timely settlement of claims when needed.<\/p>\n<ul>\n<li><strong>Check policy duration<\/strong><\/li>\n<\/ul>\n<p>Check for the policy tenure, ensuring it covers the number of years for which the income or financial support is needed.<\/p>\n<ul>\n<li><strong>Consider adding riders<\/strong><\/li>\n<\/ul>\n<p>One can use the amount saved due to the reduction of taxes to buy additional riders, such as critical illness riders, accidental death riders, waiver of premium riders, etc.<\/p>\n<ul>\n<li><strong>Buy from trusted insurers.<\/strong><\/li>\n<\/ul>\n<p>Buy from trusted insurance service providers, authorised insurers, or official websites to make an informed decision while buying a life insurance plan.<\/p>\n<h2><strong>What Affect Does it have on the insurance industry<\/strong><\/h2>\n<p>Let us understand the aftereffect of this amendment:<\/p>\n<ul>\n<li><strong>Higher Policy Adoption<\/strong><\/li>\n<\/ul>\n<p>The insurance companies are now witnessing a sudden increase in the number of purchases due to the affordability factor.<\/p>\n<ul>\n<li><strong>Lower Lapse Rates<\/strong><\/li>\n<\/ul>\n<p>The affordability leads to lower lapses in terms of discontinuation of policies, hence the insurance industry is witnessing a high retention rate &amp; increased satisfaction amongst clients.<\/p>\n<ul>\n<li><strong>Simplified Pricing Models<\/strong><\/li>\n<\/ul>\n<p>Due to the removal of multiple tax slabs, insurance companies can now indulge in the innovation of their financial products.<\/p>\n<ul>\n<li><strong>Better Financial Planning Integration<\/strong><\/li>\n<\/ul>\n<p>Now, more of the insurance professionals inculcate life insurance as their core sector of financial planning amongst clients.<\/p>\n<h2><strong>Conclusion<\/strong><\/h2>\n<p>The removal of GST on life insurance premiums has provided financial relief to individuals looking for insurance. Due to reduced premium costs, life insurance has now become accessible to a wider population. Hence, promoting financial protection with increased insurance penetration all over India, which encourages Indians to secure their financial future.<\/p>\n<p>&nbsp;<\/p>\n<div class=\"38520354a5201685ddf480eec688e1a7\" data-index=\"3\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n          <p><a id=\"link-15\" href=\"\" target=\"_blank\" rel=\"noopener noreferrer\">\r\n            <img decoding=\"async\" style=\"width:100%;height:auto;\" id=\"img-15\" src=\"\"><\/a><\/p>\r\n            <script>\r\n            var xmlhttp = new XMLHttpRequest();\r\n            xmlhttp.onreadystatechange = function() {\r\n              if (this.readyState == 4 && this.status == 200) {\r\n                var myObj = JSON.parse(this.responseText);\r\n                document.getElementById(\"link-\"+myObj.id).setAttribute('href',myObj.url);\r\n                document.getElementById(\"img-\"+myObj.id).setAttribute('src','https:\/\/fetch.drprem.com\/\/uploads\/'+myObj.image);\r\n              }\r\n            };\r\n            xmlhttp.open(\"GET\", \"https:\/\/fetch.drprem.com\/\/api\/Ads\/15\", true);\r\n            xmlhttp.send();\r\n            <\/script>\r\n        \r\n        <style>\r\n        *{box-sizing:border-box}.top-container{display: grid;grid-template-columns: auto auto auto;}.column{float:left;width:100%;padding: 0 7.5px 15px 7.5px;}.row{margin:0 -5px}.row:after{content:\"\";display:table;clear:both}@media screen and (max-width: 600px){.top-container{display: block;grid-template-columns: unset;}.column{width:100%;display:block;margin-bottom:20px}}.card{text-align:center;}.card_image img{width:100%}.card_body{padding:15px}.card_title{font-size: 14px;line-height: 19px;text-decoration: none;text-align:left;color: #333;}.card-heading{text-align: left;margin-bottom: 25px !important;}\r\n        <\/style>\r\n        <div class=\"row todays-top\">\r\n            <h3 class=\"card-heading\"> Recent Articles: <\/h3><div class=\"top-container\" id=\"todays-top\">\r\n        <\/div>\r\n        <\/div>\r\n        <script>\r\n            var xmlhttp = new XMLHttpRequest();\r\n            xmlhttp.onreadystatechange = function() {\r\n            if (this.readyState == 4 && this.status == 200) {\r\n            var myObj = JSON.parse(this.responseText); \r\n            myObj.forEach(function(item) {\r\n            document.getElementById('todays-top').innerHTML += '<div class=\"column\"><div class=\"card\"><div class=\"card_image\"><a href=\"'+item.url+'\"><img decoding=\"async\" src=\"'+item.image+'\"><\/a><\/div><div class=\"card_body\"><a href=\"'+item.url+'\"><h3 class=\"card_title\">'+item.title+'<\/h3><\/a><a href=\"'+item.url+'\">Read more<\/a><\/div><\/div><\/div>';\r\n            });\r\n            }\r\n            };\r\n            xmlhttp.open(\"GET\", \"https:\/\/fetch.drprem.com\/api\/Drprem_blogs\", true);\r\n            xmlhttp.send();\r\n            <\/script>\r\n        \r\n        \r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<style>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t.videoWrapper{position:relative;padding-bottom:56.25%;height:0}.videoWrapper iframe{position:absolute;top:0;left:0;width:100%;height:100%}\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/style>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"videoWrapper\" id=\"video_7\">\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<script>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tvar xmlhttp = new XMLHttpRequest();\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t            xmlhttp.onreadystatechange = function() {\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t            if (this.readyState == 4 && this.status == 200) {\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t                var myObj = JSON.parse(this.responseText);\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t                document.getElementById(\"video_\"+myObj.id).innerHTML = myObj.embed_video_code;\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t            }\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t            };\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t            xmlhttp.open(\"GET\", \"https:\/\/fetch.drprem.com\/api\/Videos\/7\", true);\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t            xmlhttp.send();\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/script>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\n<\/div>\n\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>Goods &amp; Services Tax (GST) is an indirect tax that came into existence in place of service tax &amp; value-added tax (VAT). It is a destination-based tax that created uniformity in the taxes levied on the supply of goods &amp; [&hellip;]<\/p>\n","protected":false},"author":107,"featured_media":109904,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[12094,12096,12093,12095],"tags":[],"class_list":["post-109903","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-planning","category-investment-wealth-management","category-personal-finance","category-taxation-gst"],"_links":{"self":[{"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/posts\/109903","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/users\/107"}],"replies":[{"embeddable":true,"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/comments?post=109903"}],"version-history":[{"count":1,"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/posts\/109903\/revisions"}],"predecessor-version":[{"id":109905,"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/posts\/109903\/revisions\/109905"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/media\/109904"}],"wp:attachment":[{"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/media?parent=109903"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/categories?post=109903"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/drprem.com\/guide\/wp-json\/wp\/v2\/tags?post=109903"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}