The government's imposition of 0% GST on health insurance premiums has sparked a surge in demand for higher coverage plans. At Policybazaar, purchases of policies with sum insured over ₹15 lakh have risen by 38%. This shift signals a maturing insurance mindset among Indians.
On September 22, the government announced 0% GST on retail health insurance premiums, welcomed as a move to make protection more affordable. But in the weeks since, it has come to represent something far more significant, reshaping how Indians think about coverage itself. For the first time, the focus is shifting from “how much premium do I pay” to “how much protection do I have.”
The early signs of this behavioural shift are unmistakable. Following the GST waiver, demand for high-value health insurance plans has jumped sharply. At Policybazaar, there has been a 38% increase in purchases of policies with higher sum insureds, with the ₹15-25 lakh range now dominating new sales. The average cover size has risen from ₹13 lakh to ₹18 lakh in a short span.
The removal of GST has made health insurance premiums about 18% cheaper for individual buyers. Yet customers are using the savings to upgrade to more comprehensive plans, reflecting a growing understanding that health insurance is a financial safeguard to be strengthened.
The pandemic exposed the real scale of medical costs and how quickly hospitalisation expenses can erode savings. The GST exemption has built on that awareness. Interestingly, the appetite for better protection extends to smaller cities and towns, with Tier 2 markets showing a shift away from low-sum insured plans.
This surge cuts across age groups. Millennials and mid-life earners are leading upgrades for lifestyle-related illnesses, while senior citizens in their sixties and seventies are choosing comprehensive covers. Adoption of add-ons like Day-1 Pre-existing Disease and critical illness cover is rising, along with multi-year policies.
These trends suggest a shift from transactional buying to thoughtful financial decision-making. The zero-GST reform has unlocked the value perception of health insurance, widening accessibility and encouraging a rethink on adequate protection. (The writer is Head, Health Insurance, Policybazaar)