One in three policyholders did not benefit from GST cut on insurance premiums, survey says

Despite the Union government’s decision to reduce Goods and Services Tax (GST) on life and health insurance premiums to 0% from September 22, 2025, many policyholders say they have not received the expected financial relief.

Nationwide survey results from over 20,000 citizens in 301 districts indicate that many insurance customers believe the GST reduction has not led to lower premiums. The findings have been submitted to the Insurance Regulatory and Development Authority of India (IRDAI) and shared with Union Finance Minister Nirmala Sitharaman.

The survey found that over 7,200 respondents, roughly one in three policyholders, said they did not benefit from the GST cut. 

They alleged that while the government reduced the tax burden, insurance companies increased the base cost of policies, effectively neutralising the intended benefit.

About 43% of respondents, nearly 9,000 people, said they had renewed their life or health insurance policies but had not experienced any noticeable reduction in premiums.

In a submission to the regulator, respondents also claimed that since 2022 several insurers have raised premiums by between 50 and 200%. Policyholders said this has reduced the value of their insurance coverage over time, with some policies reportedly removing coverage for treatment of newly emerging diseases while introducing higher deductibles and co-payment requirements.

As a result, expectations that premiums would decline following the GST reduction have not materialised, according to the survey.

Respondents also reported delays in approving cashless insurance claims. Although guidelines require such claims to be processed within three hours, policyholders said approvals often take between 10 and 12 hours, sometimes even longer. Some cases reportedly involved delays ranging from six hours to as much as 48 hours.

Nearly half of the survey participants said they had experienced such delays, which they claim often forces patients or their families to bear additional hospital expenses.

Feedback gathered during the survey also suggested that rising premium costs are discouraging younger people from purchasing insurance policies.

Separately, some senior citizens in Ahmedabad who paid premiums of around ₹1.25 lakh last year said they are awaiting renewal notices this July to see how much they will be required to pay this year.