October, 2026
Term insurance is receiving greater attention in India in 2026, especially after the removal of GST on individual life insurance policies. Under the current term insurance GST 2026 framework, GST on individual life insurance, including term plans, was reduced from 18% to nil from 22 September 2025.
This change has also supported term insurance demand 2026, as lower premium costs are encouraging more customers to review whether their existing life cover is sufficient. Industry data reported by Business Standard shows that the share of term policies with sum assured above ₹2 crore increased to 34% in FY26 from 24% in FY25.
The removal of GST on eligible individual life insurance policies has changed the cost structure for customers purchasing term insurance. From 22 September 2025, the earlier 18% GST applicable to individual life insurance premiums, including term insurance plans, was reduced to nil.
For customers comparing term insurance plans in 2026, this GST change can be considered along with other factors such as the sum assured, policy tenure, insurer, exclusions and policy conditions.
The growing interest in higher life cover is another important development in the term insurance market. According to industry data reported by Business Standard, the share of term policies with a sum assured above ₹2 crore increased to 34% in FY26 from 24% in FY25.
This trend indicates that some customers are considering larger protection amounts when reviewing their family's financial security and long-term responsibilities.
For customers evaluating a life insurance premium 2026, the premium should not be the only consideration. Several factors can influence the final cost of a term insurance policy.
These may include:
The growing interest in larger covers also makes ₹1 crore term insurance 2026 an important starting point for many families. However, ₹1 crore may be adequate for one household and insufficient for another.
The appropriate life cover should be based on the family's actual financial responsibilities rather than selecting a round-number cover simply because it is popular.
Customers should consider:
Financial responsibilities can change over time because of changes in income, loans, family size, children's education requirements and long-term financial goals. As a result, customers should periodically review whether their existing life insurance cover remains appropriate.
A higher level of cover may be considered when financial liabilities or family responsibilities increase. Customers should also review the policy tenure, exclusions and other conditions before purchasing or increasing their life insurance protection.
A suitable term insurance plan should ideally be based on the family's actual financial needs. Customers can compare plans based on coverage, premium, policy tenure, insurer features, exclusions and other applicable policy conditions.
Instead of choosing a policy only because it offers a particular premium or sum assured, customers should consider how the policy fits their income, financial responsibilities and long-term protection requirements.
Term insurance is receiving increased attention in India in 2026, supported by the removal of GST on eligible individual life insurance policies and growing interest in higher life cover.
The term insurance GST 2026 change may reduce the premium cost for eligible individual life insurance policies, while the growing demand for larger sum assured amounts highlights the importance of reviewing life protection as financial responsibilities change.
Customers should consider their income, liabilities, dependants, future expenses, existing savings and current life insurance cover before deciding on an appropriate level of protection.
At Policies365, powered by Navnit Insurance Broking Pvt. Ltd. (NIBPL), we help customers compare term insurance options and understand suitable life cover based on their financial responsibilities and budget.
Source: Department of Financial Services, Ministry of Finance, Government of India
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