Insurance is one of the most essential financial safety nets, helping us secure our health and protect our family’s future. Until now, policyholders had to pay 18% GST on health and life insurance premiums, making them more expensive. With the recent GST rate cut, insurance has technically become cheaper—but not as much as you might imagine. Let’s break it down for you.

1. What Changed in GST Rates?

Earlier, both health and life insurance premiums attracted a flat 18% GST. With the government’s latest decision, this rate has been reduced, bringing some relief to policyholders. While the reduction seems like good news, the actual benefit in terms of savings is relatively small.

2. How Much Do You Really Save?

Let’s say your annual premium is ₹20,000. Earlier, you would have paid ₹3,600 as GST (18%). After the cut, suppose the GST drops to 12%, you now pay only ₹2,400. That’s a saving of ₹1,200 annually. While any reduction is positive, the overall premium burden still remains significant.

3. Why It Still Feels Expensive

Insurance premiums are already high, especially for senior citizens or those with medical conditions. Even with a reduced GST rate, the base premium hasn’t changed. This means your policy is only slightly cheaper, not drastically. For many families, the affordability gap continues to be a challenge.

4. Who Benefits the Most?

The maximum advantage goes to people with high-value policies, such as comprehensive family health plans or large life insurance covers. Since their premiums are higher, even a small percentage cut in GST leads to noticeable savings. For those with smaller policies, the impact is minimal.

5. What Policyholders Should Do Next

· Re-evaluate your existing policies: See if your current premium is still affordable.

· Compare new plans: Some insurers may pass on additional discounts.

· Don’t delay buying: Even with smaller savings, lower GST is still a step in your favor.

· Focus on coverage, not just tax: Remember, the primary goal of insurance is financial protection, not tax saving.

📌 Final Word

The GST rate cut on insurance premiums is a welcome move, but it doesn’t make policies drastically cheaper. The real takeaway is this: don’t wait for tax cuts to secure your health or life—buying insurance early remains the smartest financial decision.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.