The removal of the Goods and Services Tax (GST) on individual health insurance policies has driven a significant rise in coverage levels across the country, according to a recent Policybazaar report. With GST reduced from 18 per cent to zero, the average sum insured on health plans has climbed 31 per cent, rising from about ₹14.5 lakh before the tax change to roughly ₹19 lakh after the exemption came into effect.
Analysis of policy data shows a marked shift in buyer preferences toward higher coverage brackets following the GST exemption. Plans with sums insured between ₹10 lakh and ₹25 lakh saw a 47 per cent increase in demand, while policies offering coverage above ₹25 lakh jumped by around 85 per cent. At the same time, demand for policies with coverage below ₹10 lakh declined by 24 per cent, indicating a move away from lower-tier plans.
Year-on-year comparisons between 2024 and 2025 reinforce this trend. Lower-coverage policies under ₹10 lakh dipped by nearly 29 per cent. In contrast, mid-range covers between ₹10 lakh and ₹25 lakh expanded by 55.6 per cent, and high-value plans above ₹25 lakh grew by 49.3 per cent, underscoring a broader consumer shift toward more comprehensive protections.
The report also highlights changes in buying behaviour across age groups and regions. Buyers aged 18-35 accounted for around 30 per cent of purchases in 2025, followed by the 35-45 age group at 26 per cent, those aged 46-60 at 23 per cent, and individuals over 61 at 21 per cent. Demand from smaller towns has risen notably: Tier-3 cities increased their share of total purchases from 63.5 per cent in 2024 to 70 per cent in 2025, while Tier-2 cities edged up slightly. Tier-1 cities, however, saw a drop in share from 22.7 per cent to 15.7 per cent. Among urban centres, Delhi and Bengaluru led in health insurance bookings, followed by Hyderabad, Pune, and Mumbai.
Health claims data within the report indicate that the most frequent reasons for claims include heart-related conditions, cancer, cataract treatments, seasonal and infectious diseases, day-care procedures, and accidental injuries. The growing popularity of multi-year health plans was another notable trend, with more buyers opting for extended protection periods to secure long-term coverage stability.
The shift toward higher coverage suggests that the GST exemption is not only reducing upfront costs for policyholders but also encouraging consumers to prioritise broader financial protection against rising medical expenses.
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