Zero GST on Life Insurance: Your Complete Savings Guide

From September 22, 2025, life insurance became a little lighter on the pocket and a lot more reassuring for families. With GST on most life insurance policies removed, what you once paid as tax now stays with you. That means the same protection, but at a lower cost.

And the best part? This change benefits not just new buyers but also those who already have a policy. Let's understand exactly how this benefits you and your family's financial planning.

The Big Change for Life Insurance Premiums At A Glance

Here are the key changes you need to know about GST on life insurance removal:

• Term insurance plans enjoy zero GST, no matter the sum assured.
• ULIPs (Unit-Linked Insurance Plans) are fully exempt from GST, regardless of coverage.
• Other life insurance policies with a sum assured above ₹5 lakh also enjoy GST exemption.
• Immediate savings of up to 18% on premiums are available, providing families with more value for the same protection.
• Existing policyholders benefit from reduced renewal premiums going forward.
• New insurance buyers get clear, transparent pricing and better value when purchasing fresh policies. 
  
   

Understanding the Key Changes: Before vs After

This table illustrates the significant difference in the cost of the same insurance protection. The removal of GST on life insurance puts thousands of rupees back in your pocket annually.

Why This Matters

The withdrawal of GST on life insurance marks a big shift in perception in India, from being considered a luxury to being considered a necessity. After all, life insurance is not merely a service; it is a safeguard for families. By removing the tax burden from it, the government tried to make insurance accessible to more people. 

Life cover is no longer loaded with extra cost, which had made it unaffordable for families before. The positive news especially extends to young families and first-time buyers who may have put off buying cheaper policies due to high premiums with tax charged thereupon. 

What Exactly Changed For Your Life Insurance Premium

Several specific changes affect your insurance costs due to the new GST on life insurance policies:

• Term life insurance policies are now completely GST-free, no matter the coverage you choose.
• Traditional life insurance plans with coverage above ₹5 lakh are fully GST-free.
• Unit-linked insurance plans (ULIPs) enjoy complete GST exemption, no matter the coverage amount.
• Renewal premiums for existing policies automatically reflect the zero GST benefit.
• New policy purchases immediately qualify for GST-free premiums.
• GST exemption may also apply to riders and add-on covers attached to qualifying policies, depending on the plan structure. 
  
   

How Life Insurance Customers Gain

The impact of GST on life insurance removal creates multiple benefits for insurance customers across India. Your immediate gain is paying 18% less for the same life insurance coverage, which translates to significant annual savings. For a family paying a Rs 30,000 yearly premium, this means saving 5,400 rupees every year. These savings accumulate over your policy term, potentially saving you lakhs of rupees over 20-30 years.

Beyond direct cost savings, this change makes higher coverage amounts more accessible. You can now afford better protection for your family within the same budget. Young professionals starting their careers often find comprehensive life insurance more affordable, allowing them to establish robust financial protection from the outset. The removal of GST on life insurance also eliminates the complexity of calculating total premium costs, making insurance planning more straightforward and transparent for all customers.

Impact on Policyholders and New Buyers

For existing policyholders, the benefit shows up right away. With GST removed, your renewal premiums drop instantly. If your policy qualifies, your next payment could be up to 18% lower than before. And it’s not just a one-time relief; this saving continues for the rest of your policy term, adding up to a significant amount over the years. The only exception is for policies with a sum assured below ₹5 lakh (except term plans), where GST still applies. So, the impact depends on the coverage you hold.

For new buyers, the change is even more impactful. Now you know exactly what your premium will be, no extra GST calculations, no surprises. This clarity makes it easier to plan your budget and choose the right cover for your family. Plus, with insurers passing on the GST savings, comprehensive policies are more attractive and affordable than ever. In short, it’s the perfect time to secure life insurance with confidence.

Plan New Purchases After September 22nd

Take advantage of the zero GST on life insurance policies with these strategic steps:

• Review your current life insurance coverage and identify gaps that need filling with new policies
• Consider upgrading to higher coverage amounts since the impact of GST on life insurance removal makes larger policies more affordable.
• Compare term insurance plans, which now offer a complete GST exemption regardless of the sum assured.
• Evaluate ULIPs, which are GST-free regardless of coverage, and traditional plans above ₹5 lakh for a GST-free investment-cum-insurance option.
• Plan family insurance purchases to maximise savings from the new GST exemption rules.
• Consult insurance advisors to restructure existing coverage for optimal benefit from GST removal.

A New Era for Life Insurance in India

The removal of GST on life insurance has changed the way families approach financial protection. With premiums reduced, savings increased, and coverage easier to plan, this shift ensures life insurance is no longer treated as a luxury but as a necessity every family can afford. 

Whether you’re renewing an existing policy or buying one for the first time, the benefits are immediate and long-lasting. With insurers like Shriram Life, you can now access affordable premiums, transparent plans, and trusted claim support, helping you protect your family’s tomorrow with confidence.

Disclaimer: This information provided is intended for general informational purposes only. For personalised recommendations, please consult a certified insurance professional.

ARN:SLIC/Elec/Sep 2025/1142