GST Relief Triggers Surge in Rs 10 Lakh+ Health Insurance Policies

By siliconindia  |  Monday, 29 December 2025, 09:05:09 AM IST

GST Relief Triggers Surge in Rs 10 Lakh+ Health Insurance Policies
  • Health insurance buyers upgraded sharply, with average sum insured rising 31% and strong growth in Rs 10 lakh+ covers after GST removal.
  • Demand shifted toward long-term and premium plans, as multi-year and unlimited health policies saw rapid adoption.
  • Tier 3 cities led the growth, increasing their share of purchases as insurance demand moved beyond metros.
Indian consumers are rethinking how they protect themselves financially. Across health, life, motor, travel and investment-linked products, buyers are not just purchasing more insurance they are choosing higher cover, longer tenures and smarter add-ons. Platform-level data tracking consumer behaviour after recent regulatory and pricing changes, especially the removal of GST on health insurance, points to a clear reset in mindset.
The strongest shift is visible in health insurance. Data analysed by Policybazaar shows that the average sum insured rose sharply by 31%, from Rs 14.5 lakh before GST removal to Rs 19 lakh after. Instead of settling for basic covers, buyers moved decisively away from policies below Rs 10 lakh. Such lower-value covers declined by 24-29% year-on-year. In contrast, demand surged for higher protection. Policies in the Rs 10-25 lakh range grew by 47-56%, while covers above Rs 25 lakh jumped by 49-85%, depending on the comparison period.
This trend suggests that affordability alone was not the driver. In a price-sensitive market like India, consumers used the GST relief not to reduce premiums, but to upgrade their protection. It reflects growing awareness of healthcare costs and the financial impact of serious illness.
The change is also visible in how policies are structured. Buyers increasingly chose multi-year health insurance plans, locking in longer-term protection. Four-year policies grew by 56% and five-year policies by 62%. Unlimited health plans, once seen as niche products, gained significant traction. In 2025, they accounted for 15.7% of purchases, compared to just 2% of eligible buys in 2024.
Geographically, insurance growth is being driven by smaller cities. Tier 3 cities increased their share of health insurance purchases from 63.5% last year to 70% in 2025. Tier 2 cities saw a marginal rise, while Tier 1 cities recorded a sharp drop in share. This points to aspirational India leading the next phase of insurance adoption, supported by rising incomes and greater health-risk awareness. Among cities, Delhi and Bengaluru led bookings, followed by Hyderabad, Pune and Mumbai.
The buyer profile in 2025 was well spread across age groups. Those aged 18-35 made up 30% of purchases, followed by the 35-45 age group at 26%, 46–60 at 23% and those above 61 at 21%. Claim data showed heart-related conditions, cancer and cataract as common triggers, along with seasonal illnesses, day-care procedures and accidental injuries.
Add-on selections also became more thoughtful. Day 1 cover rose from 73% to 81%, renewal bonus adoption increased, and OPD riders saw higher uptake. NRI demand surged as well, with strong growth from the US, Canada, Europe and the GCC, pushing overall NRI bookings up by 125%.

ON THE DECK