On September 22, 2025 the GST Council exempted all individual life and health insurance, including reinsurance, from the 18 percent levy, effective that day. Method for this review: the Department of Financial Services FAQ record plus FY26 premium disclosures from the General Insurance Council and life insurer filings. One year on, the shape is clear. Individual policies go out at base premium with no GST, group and employer sponsored covers still carry 18 percent, and instalment treatment follows payment date, so premiums paid on or after the date are exempt even if the due date was earlier.
What actually got cheaper
Individual term, ULIP, endowment, family floater and senior citizen health covers all dropped by the GST component where insurers passed it through. A Rs 10,000 base health premium that cost Rs 11,800 now costs Rs 10,000. FY26 reflects the demand response: health premium rose 15 percent to Rs 1.37 lakh crore with retail up 20 percent to Rs 56,696 crore and retail share rising to 41 percent, while term buying ran about 1.5 times with women and younger buyers leading. Motor crossed Rs 1 lakh crore on vehicle sales and the small car rate cut, a separate GST effect since motor insurance itself stayed at 18 percent.
What did not get cheaper
Group health, group term and group credit life stayed at 18 percent, so employer covers and lender bundled plans saw no relief. Insurers also lost input tax credit on commissions, rent and software for individual business, which CBIC confirmed must be reversed. That embedded cost, estimated at 1.5 percent of premium for endowment and near 7 percent for term in industry analysis, means headline savings exceed net savings, and some insurers will load residual cost into base rates at renewal within IRDAI pricing rules.
What to check on your policy now
First, confirm your policy is individual, not group, on the schedule, since the exemption turns entirely on that classification. Second, check instalment receipts around the transition: payments before the date correctly carry GST, payments after should not. Third, compare renewal base premium year on year, not just total outgo, to spot embedded cost loading. Fourth, if you delayed buying last September waiting for the cut, the data vindicates you, but do not delay needed cover for tax timing again. Fifth, group cover holders should price a personal floater separately rather than assuming the employer plan plus GST is enough.
What to watch
Watch whether IRDAI forces transparent pass through disclosure so buyers can see base versus tax versus loaded cost, and whether group GST relief ever follows. The exemption aligned with Insurance for All by 2047 and clearly widened retail buying; the second year test is whether insurers hold base rates steady as input credit pressure persists. Our companion piece this week details the individual versus group boundary case by case for buyers checking their own receipts.