GST exemption drives 1.5x growth in term insurance purchases; women, young buyers lead adoption
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The GST exemption on individual term life insurance has driven a 1.5x increase in term insurance purchases over the past year, with lower premiums encouraging customers to opt for higher coverage and additional riders, according to data from Policybazaar.
The impact of the exemption is particularly visible among affluent customers, women, homemakers, self-employed individuals, and younger buyers, the data showed. Customers are not only purchasing more policies but are also reassessing their protection needs and opting for higher sum assured and broader coverage.
NRI, HNI demand for ₹3 crore-plus covers rises
The share of NRIs opting for term insurance covers of ₹3 crore and above increased 35% after the GST exemption while the corresponding share among HNIs rose 32%, according to Policybazaar data.
Affluent customers are also opting for additional protection through riders. Rider adoption among NRIs increased 15% after the GST reform, while adoption among HNIs rose 9%.
The data suggests that lower premiums are giving higher-income customers greater headroom to increase the quantum of life cover while adding protection against specific risks.
Women, homemakers see stronger uptake
Women are increasingly opting for term insurance, with adoption among female customers growing 27% faster than among men, the data showed.
The homemaker segment recorded 60% additional growth compared with other customer segments. The trend points to a broader approach to household financial protection, with term insurance increasingly being considered in the context of the economic value and financial responsibilities of homemakers, rather than solely the income earned by an individual.
Adoption among self-employed customers was also 12% higher than in other segments. Unlike salaried employees, self-employed professionals and business owners may have less predictable income and generally do not have access to employer-provided life insurance.
₹1 crore remains the most popular cover
Despite the shift towards higher protection, ₹1 crore continues to be the most popular sum assured among term insurance buyers. More than half of all term insurance purchases are for covers of ₹1 crore or more, while ₹2 crore-plus covers account for a steady 15% share.
The data points to a two-way shift in the market, with GST relief supporting first-time buyers while also giving existing and affluent customers greater scope to increase their coverage.
Rider adoption also increased 13% in the post-GST period, driven primarily by Accidental Death Benefit (ADB) and Waiver of Premium (WOP) riders.
Younger buyers enter protection market
The 18–25 age group recorded 20% higher growth in term insurance adoption than other age groups, followed by customers aged 36–45.
The stronger uptake among younger customers suggests that more consumers are beginning to consider life protection earlier in their earning and financial journeys.
AP, Telangana lead regional growth
Andhra Pradesh and Telangana recorded the strongest growth in term insurance adoption between FY25 and FY26, with uptake rising 39% between the pre- and post-GST periods.
Kerala and Maharashtra followed, with adoption increasing 11% and 10%, respectively. The regional trend indicates that the affordability benefit from the GST exemption is extending beyond traditional metro markets and supporting wider adoption of term insurance.
“The GST exemption on individual term life insurance has had an impact that goes beyond simply reducing the premium customers pay. What we are seeing is a fundamental shift in how consumers are approaching protection,” said Varun Agarwal, Head of Term Insurance, Policybazaar.
“Customers are using the affordability benefit to reassess their protection needs, opt for higher sum assured and add riders to create more comprehensive coverage. This shift is particularly visible among HNIs and NRIs, where we are seeing stronger traction for covers of ₹3 crore and above,” he said.
Agarwal said adoption was also broadening among women, homemakers and self-employed individuals, while younger consumers were beginning their protection journey earlier. “As affordability improves, the opportunity is to move the conversation from simply buying term insurance to buying adequate term insurance,” he added.