The Central government’s move to remove goods and service tax (GST) on insurance premiums under GST reforms has sparked a sharp demand in high-value health plans, according to Policybazaar data. Post-GST
relaxation, almost half of the customers are now choosing high coverage health plans in the range of Rs 15-25 lakh, followed by 24 per cent in the Rs 10-15 lakh range, while only 18 per cent opt for cover below Rs 10 lakh.
Policybazaar data reveals that the average health cover has grown from Rs 13 lakh to Rs 18 lakh post-GST waiver. Add-on features like Day-1 pre-existing disease (PED) and critical illness coverage have also seen a sharp rise, with 25% and 20% growth respectively.
Effective from September 22, all individual health insurance, along with reinsurance thereof; and all individual life insurance, along with reinsurance thereof, have been exempt from GST. Earlier, health and term insurance products attracted a GST rate of 18 per cent.
Tier 2 Cities Go For Higher Coverage
In tier 2 cities, the share of customers opting for Rs 15–25 lakh cover has risen by 10.2% (from 44.1% to 48.6%), indicating smaller-city customers too recognise the need for comprehensive protection, data from Policybazaar revealed. Many individuals in smaller cities are opting for higher sum insured policies to lock in better coverage before they become old or face any pre-existing health conditions.
The reliance on low coverage health covers has dropped significantly from 24.1% to 16.8% (a 43.5% decline) among customers in smaller cities.
Millennials Leading This Surge
Millennials and older age groups are leading this surge — 39% of people aged 36–45 and 38% in the 46–60 group are upgrading to higher coverage plans. Interestingly, even senior citizens above 75 years are increasingly choosing comprehensive policies, showing a notable shift in attitude towards health security.
Moreover, Policybazaar reports a 50% increase in riders added to policy renewals and a rise in multi-year plan adoption, reflecting customers’ growing recognition of health insurance as a long-term safeguard rather than an annual necessity.
