Health Insurance Demand: The positive impact of the government’s recent GST reforms is now being seen in the insurance sector. Just as the real estate, auto, and MSME sectors received relief, the insurance industry has also benefited significantly. Following the removal of GST on health insurance, consumer interest in insurance plans has increased sharply.
According to a report, the demand for health insurance plans has increased by 38 percent since the abolition of GST. People are now choosing plans that offer more protection than before.
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Increased Insurance Coverage
According to the report, the average health insurance coverage was previously limited to ₹13 lakh, but has now increased to nearly ₹18 lakh. This means that customers are now opting for comprehensive financial coverage, not just basic coverage. Given the rising cost of healthcare and rising hospital expenses, people are prioritizing long-term protection.
Which plans became more popular?
After the removal of GST, the most popular health insurance plans have become those that offer coverage of ₹15 lakh to ₹25 lakh. According to the report, approximately 45 percent of customers are now choosing plans in this range. Meanwhile, 24 percent are opting for plans with coverage of ₹10 lakh to ₹15 lakh, and only 18 percent are choosing options with coverage less than ₹10 lakh. This clearly indicates that people now seek better and long-term protection rather than smaller coverage.
New rule effective September 22, 2025
The Central Government has completely abolished GST on health and life insurance premiums from September 22, 2025. This decision was taken with the aim of balancing tax rates and making insurance plans more affordable for ordinary consumers. Now, no tax is payable on insurance premiums. This has reduced the burden on customers’ pockets and is rapidly increasing insurance penetration.
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Increased awareness among senior citizens
According to the report, the demand for high-coverage insurance plans has increased not only in metropolitan cities but also in Tier-2 and smaller cities. In these cities, the share of plans with coverage of 15 to 25 lakh rupees has increased from 44.1 percent to 48.6 percent. Meanwhile, the share of plans with coverage of less than 10 lakh rupees has decreased to 16.8 percent.
In addition, demand for high-coverage plans has also increased by 11.54 percent among those aged 61 to 75 years or older. This means that senior citizens are now prioritizing plans with higher coverage to protect themselves from rising medical expenses.