Lower term-insurance premiums following GST exemption have led to a surge in higher-value policies and increased rider adoption, particularly among affluent and younger buyers in India.
Lower term-insurance premiums in India are changing how people buy protection, according to a Policybazaar report cited by Business Standard. The brokerage said purchases have risen about 1.5 times since the government exempted term plans from goods and services tax in September 2025, with many customers opting for larger sums assured and more add-ons rather than simply paying less for the same cover. Policybazaar has separately said the GST change cut the tax rate from 18% to 0% on term-insurance premiums.
The shift is most pronounced among wealthier buyers. Business Standard reported that the share of non-resident Indians buying policies with cover of Rs 3 crore or more rose 35% after the tax change, while the corresponding figure for high-net-worth individuals increased 32%. Rider uptake also climbed in those groups, rising 15% among NRIs and 9% among HNIs. Policybazaar said the pattern suggests that lower premiums have encouraged customers to think more carefully about the level of protection they need.
For the wider market, Rs 1 crore remains the most common level of cover, with more than half of term-insurance purchases at that threshold or higher. Policies with cover of Rs 2 crore or more account for 15% of sales, Business Standard said, although a separate report in May said policies above Rs 2 crore had reached 34% of sales in fiscal 2026, up from 24% in the previous year. That points to a broader move towards larger protection budgets as the tax relief takes hold.
The rise is not limited to affluent households. Women’s term-insurance purchases grew 27% faster than men’s in the post-GST period, while homemakers recorded 60% more growth than other customer segments, according to the report. Younger buyers have also become more active, with the 18 to 25 age group growing 20% faster than other age brackets. Policybazaar has argued that the lower cost of cover is helping families value unpaid household labour and encouraging people to buy earlier in life.
Self-employed customers are another fast-growing group. Their purchases increased 12% faster than those of other segments, reflecting the greater importance of individual protection where employer-backed cover may be absent or income is irregular. Rider adoption rose 13% between the pre- and post-GST periods, led by accidental death benefit and waiver of premium add-ons, suggesting that consumers are using the tax savings to widen their safety net. Policybazaar said the strongest regional gains came from Andhra Pradesh and Telangana, where adoption rose 39% between fiscal 2025 and fiscal 2026, followed by Kerala and Maharashtra. Varun Agarwal, head of term insurance at Policybazaar, said the GST exemption had prompted buyers to revisit their needs and expand their cover.
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