GST Exemption Spurs Demand for High-Value Health Plans

GST Exemption Spurs Demand for High-Value Health Plans

The Central government’s decision to exempt individual health and life insurance premiums from the 18% Goods and Services Tax (GST) has directly resulted in a significant shift in consumer behavior, driving a sharp demand for high-value health plans.

Shift to Higher Coverage

The exemption made comprehensive health plans significantly more affordable, leading consumers to opt for higher sum insured policies.

• Average Cover Increased: Policybazaar data shows the average health cover purchased grew from ₹13 lakh to ₹18 lakh post-GST waiver.
• High Coverage Preference: Almost half of the customers are now choosing high coverage health plans in the ₹15-25 lakh range.
• Decline in Low Coverage: Reliance on low coverage plans (below ₹10 lakh) has dropped significantly to only 18% of customers.

Impact Across Demographics and Cities

• Millennials and Older Groups Lead: Millennials (aged 36-45) and the 46-60 age group are leading the surge, with 39% and 38% respectively upgrading to higher coverage plans.
• Tier 2 Cities: In tier 2 cities, the share of customers opting for the ₹15-25 lakh cover has increased by 10.2% (from 44.1% to 48.6%), showing a recognition of the need for comprehensive protection in smaller cities.
• Rider and Multi-Year Plans: The platform also reported a 50% increase in riders added to policy renewals and a rise in multi-year plan adoption, indicating customers see health insurance as a long-term safeguard.

Would you like a summary of the GST exemption’s impact on insurance company profits, which were affected by the loss of Input Tax Credit?