Health Insurance Demand Soars After Zero GST: How Indians Are Securing Bigger, Cheaper Health Covers

The Indian health insurance market has witnessed a remarkable surge following the government’s decision to implement Zero GST on health and life insurance premiums. Since the policy was introduced in September 2025, the demand for health insurance plans across the country has jumped by nearly 38%, according to a recent report by Policybazaar.

This move by the Central Government has made health insurance not only more affordable but also encouraged people to opt for broader coverage options that protect them from rising medical expenses. Consumers are no longer purchasing health policies merely for tax benefits — they now see it as a long-term financial safeguard for their families.

Average Coverage Amount Rising Rapidly

Policybazaar’s findings reveal a significant increase in the average coverage amount. The typical health cover, which was earlier around ₹13 lakh, has now gone up to ₹18 lakh. Nearly 45% of buyers are choosing plans with coverage between ₹15 lakh and ₹25 lakh, while only 18% now opt for policies under ₹10 lakh.

Interestingly, this trend isn’t limited to metropolitan areas. Tier-2 cities are also seeing a major shift, with more families preferring higher-value insurance covers. The percentage of people in smaller cities purchasing policies worth ₹15–25 lakh has increased from 44.1% to 48.6%, showing that awareness and financial planning are growing beyond the metros.

Senior Citizens Leading the Change

The report highlights another crucial trend — a surge in health insurance adoption among senior citizens. The share of individuals aged 61 and above buying higher-value health covers has grown by 11.5%. This reflects a growing understanding among older adults of the need for robust medical protection, especially given the rising cost of healthcare and hospital treatments in India.

As medical inflation continues to rise, more senior citizens are investing in policies that offer comprehensive benefits, ensuring that they and their families remain financially secure in the face of emergencies.

Growing Interest in Add-On Benefits

Beyond basic plans, customers are increasingly adding optional riders such as Day-1 Pre-Existing Disease (PED) coverage and Critical Illness Cover. These add-ons offer immediate protection against pre-existing conditions and serious diseases, providing policyholders with an added layer of financial security.

Policybazaar’s report points out that awareness around these additional features is rising, with more customers looking to make their health insurance policies both affordable and effective. This shift in mindset shows that consumers are not just price-sensitive — they are also value-conscious, focusing on long-term health protection.

Government’s Role and Market Outlook

The Zero GST initiative marks a significant policy reform by the Indian government aimed at making health and life insurance affordable for all. This measure has reduced premium costs and expanded the reach of insurance providers, especially in smaller towns and among older citizens.

Experts believe that this move will have a long-lasting impact on India’s insurance penetration rate. With digital platforms simplifying the buying process and increasing awareness, more Indians are now finding it easier to explore, compare, and purchase suitable health insurance plans online.

Looking ahead, analysts expect the health insurance sector to continue its strong growth trajectory. As consumers become more health-conscious and financially aware, insurance is likely to become a fundamental component of every household’s financial planning strategy.

Conclusion

The Zero GST policy has successfully made health insurance cheaper and more accessible, leading to a noticeable rise in public trust and participation. The fact that nearly half of all customers now prefer large coverage plans between ₹15–25 lakh reflects a decisive shift toward better preparedness and financial responsibility.

Moreover, the growing adoption of add-on features such as critical illness and pre-existing disease coverage has made health insurance more comprehensive and reliable. Overall, India’s health insurance market is undergoing a major transformation — one that promises to provide millions of families with stronger financial protection against unforeseen medical challenges.