Health & Term Insurance Gets Cheaper from Sept 22: Check Here

Health & Term Insurance GST: Health and term insurance is going to get cheaper from September 22nd 2025. According to the reports individuals are going to pay 18% less on buying term and health insurance premiums. Government has taken this decision recent to revise the GST and reduce the cost on all the products. For example, a general health insurance with a premium 30,000 used to cost 35,400 with 18% GST. But, now as the tax is scrapped, the same premium insurance is going to cost on 30,000 only, saving 5,400 rupees for all the policy holders. This same benefit is going to be for term insurance holders too.

GST on Group Insurance Plans:

Group insurance plans, such as employer-sponsored health and life policies, will continue with the same 18% GST. Instead of giving the benefit to institutions or offices, the government directed this relief to the general public to reduce household expenses and encourage them to buy more protection plans. Experts call the removal of GST on all individual health and term insurance policies a landmark decision by the government. This move encourages more people to purchase insurance plans and achieve financial stability in their lives.

Also Read: Top 5 Health Care Mutual Funds to Invest in 2025

What all insurance plans are exempted from GST?
According to the report, all the individual life insurance policies, which includes term, life and also health insurance are exempted from GST. Even the health insurance policies for family and also for senior citizens are exempted from GST.

Will Health Insurers going to have input tax burden?
Health insurers are going to bear a burden of 2.5–3% as a result of the input tax credit issue. In the current fiscal year, insurers are unlikely to transfer this burden to clients because the government is eager for the whole benefit to be distributed to clients.

GST Exemption Affect on Insurance Companies:
Structural issues such the inverted duty structure that might result in their having unused input tax credits. Because health and life plans have zero GST to offset the greater GST paid on various input services, insurers are left with input tax credits that they are unable to use.