Removal of Goods and Services Tax (GST) from individual health insurance covers in India has had a positive impact on the sales of high-value health insurance plans according to a new study.
Insurance aggregator PolicyBazaar.com has reported that demand for higher health insurance coverage has risen sharply up by 38%, as individuals are now prioritising financial security against healthcare costs.
The PolicyBazaar.com report said almost half of the health insurance buyers’ (45%) post-GST exemption are choosing higher coverage in the range of INR15,00,000 – INR25,00,000 ($17,000 - $28,000).
Around 24% of the buyers have sought health covers in the range of INR10,00,000 – INR15,00,000 while only 18% have opted for covers below INR10,00,000.
PolicyBazaar.com said, “This intuiting shift highlights that customers are switching to robust financial protection against medical inflation. Also, the post-pandemic health consciousness is driving this trend, making health insurance a priority among the majority of people across geographies.
According to the report smaller cities are catching up in high-sum insured adoption. In tier 2 cities, the share of customers opting for INR15,00,000 have seen a growth of around 10.2% (from 44.1% to 48.6%).
This indicates that smaller-city customers too recognise the need for comprehensive protection. Many individuals in smaller cities are opting for higher sum insured policies to lock in better coverage in before they become old or face any pre-existing health conditions.
The study also reveals that there is a sharp decline in low coverage health plans and this shows an evolving risk awareness beyond metros. The reliance on low coverage health covers has dropped significantly from 24.1% to 16.8% (a 43.5% decline) among customers in smaller cities. This reflects that even non-metro consumers are moving beyond minimal coverage to secure financially stronger health plans.
A significant finding in the report is that the millennials and older age group people are leading the surge in purchase of high sum insured plans. Following the government’s decision to make health insurance covers entirely GST exempt, more consumers are opting for higher sum insured plans.
About 39% of those aged 36–45 are upgrading to high-coverage policies, followed by 38% in the 46–60 group and 34% among 18–35-year-olds due to increasing incidence of lifestyle diseases.
Senior citizens including even 75+ are choosing comprehensive health covers- Interestingly, there is 11.54% uptick towards high-sum insured among elderly customers in age group 61 to 75 and 75+ translating that even senior citizen customers today are conscious about their healthcare needs.
They are opting for comprehensive plans to ensure better protection against rising medical costs, reflecting a significant change in attitudes towards health insurance in their later years.
PolicyBazaar.com business head health insurance Siddharth Singhal said, “The zero GST exemption has acted as a powerful catalyst in the Indian health insurance ecosystem. It has not only addressed affordability but has also encouraged a shift from minimal to maximum protection across all age groups and geographies.
"Today, more customers are inclined towards higher sum insured comprehensive covers with riders like Day-1 pre-existing diseases covers and critical illness. It is encouraging to notice this behavioural change—from purchasing health insurance just for compliance to buying it truly for financial security and preparedness during medical emergencies.”