Axis Max Life sees 60% jump in protection sales post GST exemption, pivots away from ULIPs

ULIPs, traditionally the company’s anchor category, now account for 37 percent of the retail portfolio as of Q2 FY26, down from 42 percent in Q4 FY25, which is a steep drop that the segment has witnessed in this segment.

On the other hand, demand for non-participating savings products has consequently strengthened, contributing 28 percent of the mix, compared to 23 percent in Q4 FY25. Participating products now stand at 13 percent, down from 15 percent in FY25. Protection and health together also make up 13 percent, while annuities contribute the remaining 8 percent.

In an earlier conversation with CFO Amrit Singh following the Q4 results, he had said the company was already anticipating a 3-5 percent reduction in its unit-linked insurance plan (ULIP) mix in FY26, citing geopolitical risks and economic uncertainty that were pushing customers toward more traditional product forms. The GST reforms seems to have further supported this shift.

What’s noteworthy is that. this shift is not unique to Axis Max Life.

Sector mirrors same rebalancing

Across India’s listed life insurers, the one-year period from Q2 FY25 to Q2 FY26 has seen a visible moderation in ULIP contributions as macro uncertainty and market volatility push customers toward guaranteed-return and pure-protection offerings.

SBI Life, for instance, saw non-par (protection) savings rise to 41 percent of total business in H1 FY26, up from 32 percent a year earlier. Demand for guaranteed-return plans remains “robust” across banca and agency channels, CEO Amit Jhingran told analysts during the earnings call, noting that the current yield environment enables competitive pricing without compressing margins. SBI Life’s ULIP share, meanwhile, has dropped to 55 percent, from 61 percent a year ago.

ICICI Prudential Life has also reported steady traction in its non-linked savings segment, with the portfolio rising to 21.8 percent as of Q2 FY26, from 19.6 percent a year ago.

HDFC Life, however, bucked this broader trend. Its non-par share dropped sharply to 18 percent in H1 FY26, from 32 percent a year earlier, a correction from an unusually high base in FY25. “We do expect some pickup in non-par in the second half. We see some aggression in pricing, which we stay away from,” MD & CEO Vibha Padalkar told analysts. She added that rational behaviour is returning post-GST and that protection remains a core focus, with term business growing 27 percent in sum assured.

Prayesh Jain, an analyst at Motilal Oswal Financial Services said, he sees this shift towards non-par and away from ULIPs sustaining through the rest of FY26.

He said, “The GST exemption has boosted the effective IRR (internal rate of return) on protection and guaranteed products, and with interest rates expected to start trending down, customers perceive these products as safer long-term options. Meanwhile, ULIPs have had a mixed performance in the last couple of quarters because of market volatility. All of this is pushing insurers to rebalance towards non-par offerings.”

While the GST exemption has boosted consumer demand, insurers face a new challenge: the loss of Input Tax Credit (ITC). Without ITC, insurers cannot offset GST paid on agent commissions, marketing, and key operational expenses, which is a hit that can pressure margins.

Several insurers, including Axis Max Life, have indicated they are prepared for the transition, relying on cost optimisation, product repricing, and distribution efficiencies to absorb the impact. Axis Max Life, too, has had to pass on part of the ITC burden to distributors, in line with industry practice.