More than half of term insurance buyers now choose ₹1 crore+ cover: What has changed after GST relief
The GST exemption on individual term insurance has coincided with a sharp rise in demand for higher life cover, with ₹1 crore-plus policies now accounting for more than half of purchases. The report shows buyers are not only purchasing more term plans but are also reassessing the level of financial protection they need.
- Sep 23, 2026,
- Updated Sep 23, 2026 2:45 PM IST
More than half of term insurance purchases are now for cover of ₹1 crore or more, indicating a shift towards higher protection after the exemption of individual term life insurance from GST. According to Policybazaar’s “One Year of GST Reform” report, term insurance adoption grew around 1.5 times in the year following the GST reform.
The report shows that ₹2 crore-plus covers account for 15% of purchases, while ₹1 crore continues to be the most popular sum assured. The trend suggests that buyers are not merely using the tax relief to reduce premiums but are reassessing how much life cover they need.
Why ₹1 crore may not be enough
A ₹1 crore policy can appear substantial, but the appropriate sum assured depends on a household's income, liabilities, dependants and future financial commitments.
For example, a person earning ₹15 lakh a year may have several decades of working life remaining. A ₹1 crore payout may replace only a limited number of years of income, particularly when inflation is taken into account. Outstanding home or education loans, children's future education expenses and other family obligations can further increase the required cover.
The report also highlights a growing preference for higher protection among affluent customers. The share of ₹3 crore-plus covers among HNIs increased 32%, while the corresponding share among NRIs rose 35% after GST reform.
How should buyers calculate adequate cover?
Rather than selecting a round figure such as ₹1 crore, financial planners generally assess the family's financial requirement if the policyholder were no longer able to provide income.
A starting point is to consider outstanding liabilities, future financial goals and the family's income-replacement requirement, while accounting for existing investments and insurance coverage.
For instance, someone with a ₹50 lakh home loan, children's education expenses and substantial household responsibilities would need to factor these obligations into the calculation rather than simply opting for a ₹1 crore policy because it is a popular cover.
The calculation should also account for inflation. A child's education expense that appears manageable today could be considerably higher 10–15 years from now.
DO READ: UPI MDR GST: NPCI says small merchants and 96% of transactions remain unaffected from October 15
GST relief is changing buying behaviour
The Policybazaar report indicates that the change is broader than an increase in the sum assured. Rider adoption rose 13% in the post-GST period, led by Accidental Death Benefit and Waiver of Premium riders.
Women and younger consumers are also entering the term insurance market at a faster pace. Female term insurance adoption grew 27% faster than male adoption, while the 18–25 age group recorded growth 20% higher than other age groups.
For consumers, the key takeaway is that a lower premium does not necessarily mean the objective should be to buy the cheapest policy. The more important question is whether the cover is sufficient to protect dependants against income loss, debt and future financial goals.
With ₹1 crore now accounting for more than half of purchases, the emerging trend is towards higher protection—but the right cover ultimately needs to be determined by an individual's financial obligations rather than the most commonly purchased sum assured.
ALSO READ: Life insurance industry grows over 20% in February; LIC outpaces private insurers: Report
More than half of term insurance purchases are now for cover of ₹1 crore or more, indicating a shift towards higher protection after the exemption of individual term life insurance from GST. According to Policybazaar’s “One Year of GST Reform” report, term insurance adoption grew around 1.5 times in the year following the GST reform.
The report shows that ₹2 crore-plus covers account for 15% of purchases, while ₹1 crore continues to be the most popular sum assured. The trend suggests that buyers are not merely using the tax relief to reduce premiums but are reassessing how much life cover they need.
Why ₹1 crore may not be enough
A ₹1 crore policy can appear substantial, but the appropriate sum assured depends on a household's income, liabilities, dependants and future financial commitments.
For example, a person earning ₹15 lakh a year may have several decades of working life remaining. A ₹1 crore payout may replace only a limited number of years of income, particularly when inflation is taken into account. Outstanding home or education loans, children's future education expenses and other family obligations can further increase the required cover.
The report also highlights a growing preference for higher protection among affluent customers. The share of ₹3 crore-plus covers among HNIs increased 32%, while the corresponding share among NRIs rose 35% after GST reform.
How should buyers calculate adequate cover?
Rather than selecting a round figure such as ₹1 crore, financial planners generally assess the family's financial requirement if the policyholder were no longer able to provide income.
A starting point is to consider outstanding liabilities, future financial goals and the family's income-replacement requirement, while accounting for existing investments and insurance coverage.
For instance, someone with a ₹50 lakh home loan, children's education expenses and substantial household responsibilities would need to factor these obligations into the calculation rather than simply opting for a ₹1 crore policy because it is a popular cover.
The calculation should also account for inflation. A child's education expense that appears manageable today could be considerably higher 10–15 years from now.
DO READ: UPI MDR GST: NPCI says small merchants and 96% of transactions remain unaffected from October 15
GST relief is changing buying behaviour
The Policybazaar report indicates that the change is broader than an increase in the sum assured. Rider adoption rose 13% in the post-GST period, led by Accidental Death Benefit and Waiver of Premium riders.
Women and younger consumers are also entering the term insurance market at a faster pace. Female term insurance adoption grew 27% faster than male adoption, while the 18–25 age group recorded growth 20% higher than other age groups.
For consumers, the key takeaway is that a lower premium does not necessarily mean the objective should be to buy the cheapest policy. The more important question is whether the cover is sufficient to protect dependants against income loss, debt and future financial goals.
With ₹1 crore now accounting for more than half of purchases, the emerging trend is towards higher protection—but the right cover ultimately needs to be determined by an individual's financial obligations rather than the most commonly purchased sum assured.
ALSO READ: Life insurance industry grows over 20% in February; LIC outpaces private insurers: Report