Insurers, distributors go zero-GST before deadline, but exempt policies will be issued from official date

Customers can already complete their purchases without the tax burden, but the policy will get issued only after September 22, 2025.

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Insurance companies and distributors have moved ahead of schedule to offer customers the option to buy zero-GST policies before the exempted rates officially take effect, however, the policies will be issued only after September 22.

Though the GST exemption on life and health insurance premiums is yet to kick in, insurers and marketplaces such as Policybazaar have started offering customers the option to buy policies at GST-free rates.

Amit Chhabra, Chief Business Officer at Policybazaar confirmed this and said that while policies reflecting the tax exemption will be issued only from September 22, insurers are advising customers not to wait until the deadline to make their purchases.

“While the new GST regime officially goes live on September 22, the industry has worked to make zero percent GST feasible immediately. Families should not delay protection, they can buy today and benefit fully from the government’s reform,” Chhabra told Moneycontrol.

Chhabra added that discussions on the input tax credit (ITC) are still underway, with insurers and policymakers yet to establish clarity on how the loss of ITC will be addressed and what it could mean for insurers’ operating costs. “I’d prefer not to comment further at this stage,” he added.

Why the Rush?

An ex-IRDAI member who did not wish to be named told Moneycontrol that one big reason for the surge in early purchases is the processing time.

“Since most term and health policies take about a week to get issued, insurers say buying in advance ensures that customers don’t lose out on the September 22 start date. Waiting until the official rollout could mean coverage begins only a week later,” he said.

Another health insurance executive said that persistency levels - a measure of policy renewals - are already at an all-time high for term-products. New policy sales have spiked, he noted, and existing customers are renewing early to lock in the tax savings. Awareness levels around insurance as a protection tool have also risen sharply in recent weeks, he said.

Read More: Why August saw slow growth for life insurers

What it Means for Policyholders

With the removal of GST, insurance premiums are set to fall by around 15-18 percent, making protection products significantly more affordable. Customers can already complete their purchases without the tax burden, but the policy will get issued only after September 22, 2025.

The government has framed this exemption as part of its broader 'Insurance for All by 2047' vision, aimed at expanding coverage across the population.