The GST exemption on individual term life insurance has driven a 1.5x increase in term insurance purchases over the past year, with lower premiums encouraging customers to opt for higher coverage and additional riders, according to data from Policybazaar reported by Fortune India. The impact is particularly visible among affluent customers, women, homemakers, self-employed individuals and younger buyers.

Who is buying more

  • NRIs: the share opting for term covers of Rs 3 crore and above increased 35% after the GST exemption. Rider adoption among NRIs increased 15%.
  • HNIs: the share of Rs 3 crore+ covers rose 32%. Rider adoption rose 9%.
  • Women: adoption among female customers grew 27% faster than among men, a significant shift in a category historically dominated by male policyholders.
  • Younger buyers: the 18-25 age group recorded 20% higher growth in term insurance adoption than other age groups, followed by customers aged 36-45.
  • Regional spread: Andhra Pradesh and Telangana led with 39% growth in adoption between FY25 and FY26, followed by Kerala at 11% and Maharashtra at 10%.

The numbers

Rs 1 crore remains the most popular sum assured, accounting for more than half of all term insurance purchases. More than half of all purchases are for covers of Rs 1 crore or more, while Rs 2 crore-plus covers account for a steady 15% share. Overall rider adoption rose 13% in the post-GST period, driven primarily by Accidental Death Benefit and Waiver of Premium riders.

Why this matters to you

The GST exemption has made term insurance meaningfully cheaper, but the data shows customers are using the savings to buy more protection, not just pay less. If you have been putting off a term insurance purchase, the premium advantage is real. For existing policyholders, this is a prompt to check whether your current cover is adequate. The shift toward higher sum assured and rider adoption suggests the market is moving from underinsurance toward more adequate protection, which is exactly what the GST exemption was intended to achieve.

The protection gap context

India remains significantly underinsured. Life insurance penetration has hovered in the low single digits of GDP for years. The GST exemption, combined with IRDAI broader reforms including Bima Sugam and the Public Insurance Registry, is designed to close this gap. The 1.5x growth is encouraging, but the base effect from historically low penetration means there is still a long way to go.