Policybazaar Sees Surge in Health and Term Insurance Purchases After GST Exemption

Policybazaar has reported a significant rise in health and term insurance purchases following the government’s decision to remove Goods and Services Tax (GST) on pure protection policies. 

The move has lowered the tax rate on term insurance and standard health insurance plans from 18% (and 12% for certain health products) to zero, making these products more accessible for policyholders. Investment-linked plans, such as ULIPs and endowment policies, remain subject to existing GST rates.

Impact on Term and Health Insurance

Following the implementation of the zero-GST rule, demand for term insurance on Policybazaar rose 2.5 times compared to the pre-announcement average till September 2025. 

Health insurance also saw a sharp increase, rising 2.2 times during the same period. After the initial surge, the trend stabilised, with term insurance purchases maintaining 1.8 times the previous average and health insurance remaining at 1.7 times the pre-GST figures.

Affordability and Policy Uptake

India’s insurance penetration has traditionally lagged behind global standards. Taxation has been identified as a key barrier to wider adoption of protection products. By removing GST, the effective premium cost for policyholders has decreased, improving affordability for first-time buyers and enhancing the appeal of pure protection policies. 

Seasonal Influence and Market Timing

The increase in policy purchases coincided with the Navratri festive period, which generally sees higher engagement in financial planning and investment activities. The combination of the GST exemption and the festive season created favourable conditions for policyholders to evaluate and purchase health and term insurance products.

Policybazaar’s Role in Market Response

As a leading online insurance platform, Policybazaar has been instrumental in facilitating easier access to insurance products for a wide range of customers. The platform has enabled users to compare plans, understand policy features, and complete purchases digitally, allowing the surge in demand to be efficiently accommodated.

Read more: Policybazaar Introduces Specialised EV Insurance Plans for Tesla Buyers in India

Conclusion

The removal of GST on pure protection plans has had a measurable impact on consumer behaviour, highlighting how policy measures can directly influence the insurance market. With affordability improving and digital platforms supporting accessibility, the health and term insurance segments have experienced a noticeable uptick in interest among Indian consumers.

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