Govt Scraps GST on Life, Health Insurance to Boost Adoption
In a landmark decision aimed at making insurance more affordable and accessible, the government has announced the removal of Goods and Services Tax (GST) on life and health insurance premiums. This bold move is expected to encourage millions of individuals and families to invest in insurance plans, thereby strengthening financial security across the country.
Why This Move Matters
Until now, life and health insurance policies were subject to an 18% GST, making them costlier for the common man. With the tax burden gone, premiums will now be more affordable, especially for middle-class families and senior citizens who often find insurance expensive. By scrapping GST, the government has taken a step toward increasing insurance penetration in India, which has remained relatively low compared to global standards.
Boost to Health and Financial Security
Healthcare costs in India are rising sharply, and unexpected medical expenses often push families into financial distress. Similarly, the lack of adequate life insurance coverage leaves dependents vulnerable in case of unforeseen circumstances. With this move, people are more likely to opt for adequate coverage, reducing the overall burden of out-of-pocket medical expenses and ensuring financial stability for their families.
Industry Impact
Insurance companies are expected to benefit significantly from this policy change as lower premiums will likely attract more policyholders. A wider customer base means healthier growth in the sector, creating more trust and awareness about insurance as an essential financial tool. Moreover, insurers can now focus on offering innovative products without the concern of GST making them unaffordable.
Encouraging Wider Adoption
This decision aligns with the government’s long-term vision of building a financially secure nation. By eliminating GST on insurance, the move is not only pro-citizen but also pro-industry, ensuring a win-win situation. It is expected that young professionals, small business owners, and rural households—segments that have historically been underinsured—will now be more inclined to purchase policies.
Conclusion
The scrapping of GST on life and health insurance is more than just a financial relief; it is a step toward empowering citizens to prioritize their health and future security. As insurance becomes more affordable, India is set to witness higher adoption, improved risk coverage, and a stronger safety net for its people. This landmark reform signals a major leap in building a healthier, financially resilient nation.
Ref. Link : https://www.livemint.com/news/govt-scraps-gst-on-life-health-insurance-in-move-to-boost-adoption-health-products-itc-policyholders-healthcare-costs-11756923072266.html
