Entry-level health insurance cover sizes are rising, with ₹10 lakh emerging as the new baseline, driven by GST waiver on premiums and tax-saving benefits.
| Photo Credit:
sesame

The size of entry-level health insurance covers has been rising in the current financial year, driven largely by the waiver of Goods and Services Tax (GST) on premiums and the tax-saving appeal of such policies.

Over the past six months, nearly 15–20 per cent of entry-level health insurance policies have seen an increase in the sum insured, according to industry experts.

“Earlier, a significant proportion of customers tended to opt for entry-level covers in the ₹3–5 lakh range, often viewing health insurance primarily as a compliance or tax-saving tool. Post GST rationalisation, we are increasingly witnessing a decisive shift towards higher sums insured,” Udayan Joshi, Chief Operating Officer, SBI General Insurance, told Business Line.

“This trend is now changing, with a ₹10 lakh cover emerging as the new baseline for entry-level policies,” he added.

Policyholders upgrade coverage and add riders

Insurers are also seeing a noticeable rise in existing policyholders upgrading their coverage, adding riders, or opting for top-up plans to bridge protection gaps.

The head of underwriting at a listed private general insurance company said the 18 per cent GST waiver on health insurance premiums (along with life cover) would naturally be more beneficial when the size of the cover, or sum assured, is higher.

“Particularly among those below 35 years of age, there is greater interest not only in taking health cover but also in opting for a higher sum insured,” he said.

Strong demand momentum across the sector

The last two quarters have witnessed strong and sustained momentum in health insurance demand, with GST rationalisation playing a meaningful supporting role. Improved affordability has lowered entry barriers, encouraging both first-time buyers to enter the category and existing policyholders to enhance their protection. Insurers said this trend is clearly visible across the industry.

“There is an increase in customer preference for higher sum insured amounts, along with greater emphasis on comprehensive coverage and optional add-ons. The changes brought about by GST exemption in retail health insurance products are also encouraging consumers to opt for higher sums insured due to the savings,” said Arti Mulik, Chief Technical Officer, Universal Sompo General Insurance.

Tax-saving push drives year-end demand

The last quarter of every financial year typically sees higher demand for health insurance driven by tax-saving considerations.

As the financial year-end approaches, Section 80D of the Income Tax Act, 1961, offers individuals an opportunity to review and enhance their health insurance coverage as part of their tax planning.

“The provision allows deductions of up to ₹25,000 for self and family, along with additional tax benefits of up to ₹50,000 for senior citizen parents, making it a meaningful incentive,” said Srikanth Kandikonda, Chief Financial Officer, ManipalCigna Health Insurance.

Need for adequate health cover gains focus

Rising concerns over the adequacy of health cover are also prompting customers to opt for larger cover sizes.

“Beyond the immediate tax benefit, we recommend using this period as a checkpoint to reassess whether existing health coverage is adequate and aligned with current needs,” he added.

Published on March 31, 2026