Zero GST on health insurance plans sparks 38% surge in demand: Report - World News Network

New Delhi [India], October 30 (ANI): The government’s move to remove Goods and Services Tax (GST) on health insurance plans has triggered a sharp rise in demand, with the overall uptake for higher health insurance coverage surging by 38 per cent, according to a report by Policybazaar.
The report indicated that individuals are increasingly prioritising financial security against rising healthcare costs and medical emergencies.
It stated “Zero GST sparks 38 per cent rise in high-value health plans, demand for add-ons also catches up”
According to the report, the average health insurance cover has increased from Rs 13 lakh to Rs 18 lakh, reflecting a growing awareness among consumers about the need for comprehensive protection rather than minimal coverage.
It also shared that nearly half of health insurance buyers (45 per cent) after the GST exemption are opting for policies in the Rs 15-25 lakh range. Around 24 per cent of customers are selecting coverage between Rs 10-15 lakh, while only 18 per cent continue to prefer lower coverage below Rs 10 lakh.
The Central government, after the GST rate rationalisation meeting, announced a GST exemption on all health and life insurance premiums. The new rule came into effect on September 22, 2025. The exemption was made to make health and life insurance policies more affordable for customers, as they will no longer need to pay GST on insurance premiums.
The report highlighted that millennials and older age groups are driving the surge in higher sum insured (SI) plans. The preference for low coverage has dropped sharply in smaller cities, from 24.1 per cent to 16.8 per cent.
This indicates that even customers in Tier-2 cities are becoming more conscious of healthcare protection. In these smaller cities, the share of customers opting for Rs 15-25 lakh coverage has risen by 10.2 per cent, from 44.1 per cent to 48.6 per cent, showing that the demand for comprehensive plans is expanding beyond metros.
Another notable trend is the growing popularity of add-ons such as Day-1 Pre-Existing Disease (PED) and critical illness coverage, which are gaining strong traction among buyers seeking enhanced financial protection.
Interestingly, the report also noted an 11.54 per cent increase in high-sum insured plans among elderly customers aged 61 to 75 and above 75 years.
This, as per the report, reflects a significant change in mindset among senior citizens, who are now opting for broader coverage to safeguard themselves from rising medical expenses.
Many individuals in smaller towns are also choosing to secure higher sum insured policies early to ensure better coverage before they face age-related or pre-existing health conditions.
Overall, the report highlighted a growing shift in consumer behaviour, Indians are increasingly aware of the importance of adequate health coverage, and the zero-GST policy has acted as a major catalyst in encouraging people across age groups and geographies to invest in comprehensive health insurance plans. (ANI)

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