The share of term insurance policies with sum assured above ₹2 crore jumped to 34 per cent in FY26 from 24 per cent in FY25, according to data from Policybazaar. This represents a 10 percentage-point swing that reflects both the direct affordability benefit of the September 2025 GST exemption and a broader reassessment of household risk exposure. The share of policies below ₹2 crore fell to 66 per cent from 76 per cent over the same period.
The exemption, which rationalised an 18 per cent levy on retail term policies, lowered monthly premiums meaningfully and appears to have cleared a psychological price barrier for consumers considering larger covers. As reported by Policybazaar, Varun Agarwal, head of Term Insurance, explained that people were gradually opting for higher sum assured policies, but post-GST affordability has also helped — driven by better affordability, competitive pricing, increased awareness, and customers recognising the need for larger covers due to inflation and rising financial responsibilities.
The momentum is translating into strong numbers across the sector. According to ICICI Prudential Life, industry retail sum assured grew at 2.5 times the pre-reform rate in the six months following the tax change. Its own retail new business sum assured reached ₹4.5 trillion in FY26, with retail protection expanding 50.9 per cent year-on-year in the second half (H2FY26). HDFC Life reported 43 per cent growth in retail protection, with term insurance's share of individual annualised premium equivalent rising to 7 per cent from 5 per cent. SBI Life said protection contributed ₹2,240 crore to APE — 9 per cent of the total, recording 10 per cent Y-o-Y growth.
The GST exemption has created significant opportunities for NRIs living in the UK, who can now purchase Indian term insurance plans online without physically visiting India. As per Policybazaar, Rahul, a 30-year-old software engineer living in London earning £70,000 annually, purchased a ₹1 crore Indian term insurance policy for approximately ₹780 monthly for a 30-year policy term. The policy provides worldwide coverage, with claims processed online and payouts made directly to Indian bank accounts in INR, making the process convenient for families already living in India. The exemption has made Indian term insurance plans even more cost-effective for UK-based Indians seeking affordable financial protection.
