The government’s decision to remove GST from term insurance premiums has made headlines in the financial sector. By removing the GST, term plans have become more affordable, making it easier for families to get the financial protection they need. Plus, this move encourages more people to secure long-term protection without worrying about extra costs.
Why ₹1 Crore Term Insurance Has Become a Popular Choice
Over the past few years, ₹1 crore term insurance has emerged as the preferred coverage amount for middle- and upper-income households. The sum assured is deemed sufficient to meet major financial objectives, such as mortgages, children’s education costs and daily expenses in case of an untimely death.
As living costs, inflation and financial responsibilities continue to rise, a ₹1 crore cover strikes the right balance between affordability and protection. Using a term insurance premium calculator also helps you understand how budget-friendly this coverage can be.
How GST Previously Affected ₹1 Crore Term Insurance Plans
Until recently, GST on term insurance premiums was charged at 18%, which directly increased the cost of protection for consumers. Although the tax element had no impact on coverage or benefits, it did affect purchase decisions, especially among young buyers and first-time policyholders. The added tax burden usually deterred people from purchasing more coverage or caused them to delay the purchase of a term plan.
With the GST removal on term insurance, that financial friction has been eliminated. Policyholders now pay only the base premium amount, making protection more affordable and transparent.
How Much Will Policyholders Save on ₹1 Crore Term Insurance Now?
The savings from the GST exemption on a ₹1 crore term insurance plan can be significant, especially over the long term, as removing 18% GST reduces the effective cost of premiums.
For example:
- Before GST removal: A ₹1 crore term insurance policy costing ₹15,000 per year required a total payment of ₹17,700 (including GST).
- After GST removal: The same policy now costs ₹15,000, resulting in an annual savings of ₹2,700.
Over a 25-year term, that adds up to more than ₹67,000 in savings, without reducing any coverage or benefits. For families managing several financial goals, this kind of saving can make a real difference. On top of that, policyholders can still make use of the existing term life insurance tax benefit provisions.
How the GST Exemption on ₹1 Crore Term Insurance Plans Benefits Policyholders
Here are the key benefits for policyholders:
Affordability: Since the 18% GST is no longer added, term insurance costs less. This means more families can easily buy bigger coverage, like 1 crore or 2 crore.
Clearer and simpler pricing: Without GST, the premium you see is exactly what you pay.
Encouragement to buy early: For young earners, this change makes it easier to take their first step into financial planning. They can lock in lower premiums without worrying about extra tax costs.
More room for customisation: The money saved from GST can be used to add helpful riders, such as critical illness or accidental death benefits, making the overall policy more comprehensive.
Wrapping Up
Removing GST from term insurance plans is a meaningful step for families across India. It not only lowers the cost of getting good financial protection but also encourages more people to secure their loved ones. Overall, this GST exemption on term insurance is expected to reshape India’s insurance landscape in several ways. Industry analysts predict that demand for pure protection plans could increase as they become more cost-effective. Insurers may also see an expansion in their customer base, particularly among salaried professionals and young families who previously viewed term insurance as expensive.
FAQs
Which Indian term insurance provider is the best?
There isn’t one company that works for everyone. The best choice depends on what matters most to you, whether it’s a digital-first journey, flexible features, or dependable customer support. Insurance companies such as HDFC Life, ACKO Life, ICICI Prudential Life, and Tata AIA Life offer unique term insurance plans worth exploring.
Is a 1 crore term insurance policy too much?
Not really. When you think about rising expenses, education costs, EMIs, and long-term goals, ₹1 crore often turns out to be a sensible and practical coverage amount. It helps make sure your family is protected financially if something unexpected happens.
Is this a good time to buy term insurance now that GST has been removed?
Yes. With GST no longer added to premiums, term insurance has become more affordable, especially for higher covers like ₹1 crore. If you’ve been waiting for the right time to buy, this change makes it easier to get strong protection at a better price.
Which term insurance companies have the highest claim settlement ratio?
Many insurers in India maintain a strong claim settlement record. HDFC Life, ACKO Life, ICICI Prudential Life, Tata AIA Life, and Max Life are some well-known names.
Reference Links
- https://www.policybazaar.com/term-insurance/gst-on-term-insurance
- https://www.policybazaar.com/term-insurance/news/removal-of-gst-on-term-insurance-premiums
- https://www.policybazaar.com/term-insurance/news/removal-of-gst-on-term-insurance-premiums
- https://www.livemint.com/focus/what-the-proposed-gst-removal-on-term-life-insurance-means-for-young-families-11756187985439.html
- https://www.edelweisslife.in/blogs/2025-gst-reforms-life-insurance-premiums-now-gst-free-%7C-edelweiss-life
- https://www.acko.com/life-insurance/zero-gst-on-term-insurance
- https://www.pnbmetlife.com/articles/taxation/gst-on-insurance-premiums.html
- https://www.kotaklife.com/insurance-guide/current-affairs/zero-gst-on-life-and-health-insurance
