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Life, health and motor policies each protect against a different kind of "if" — a death, a hospital bill, a road accident. They're regulated differently, taxed differently, and priced differently too. Here's what changed most recently, and what stays true across all three.
From 22 September 2025, GST on individual life and health premiums dropped from 18% to nil — group policies and motor insurance are unaffected.
Illustrative example on a ₹18,000 base premium. The exemption applies to individual life policies (term, endowment, ULIP) and individual health policies, including family floater and senior-citizen plans. Employer-sponsored group covers still attract 18% GST, and the change doesn't touch policy terms, waiting periods, or sum insured — only the tax line.
A term plan is the simplest form: a fixed sum assured is paid to your nominee if you die within the policy term, and nothing is paid out if you outlive it. Endowment and whole-life plans build in a maturity payout too, at a higher premium for the same cover. ULIPs route part of the premium into market-linked funds, so the eventual payout moves with markets rather than being fixed upfront.
Whichever type you hold, the death benefit itself is always paid in full — it's only the maturity or surrender proceeds that can attract tax once premiums cross a threshold.
Unlike life cover, a health policy doesn't pay out a fixed sum on a single event — it reimburses or directly settles actual hospital bills up to your sum insured, which typically renews each year. Cashless treatment at a network hospital needs a request approved by the insurer's desk at the hospital; outside the network, you pay first and file for reimbursement.
A no-claim year is usually rewarded with a cumulative bonus that raises your sum insured or trims your premium — the exact structure varies by insurer, unlike the fixed slabs used in motor insurance.
Third-party liability cover is mandatory for every vehicle on Indian roads under the Motor Vehicles Act, 1988 — it pays for injury or damage you cause to someone else, and its premium is fixed annually by IRDAI, so it costs the same no matter which insurer you buy it from. A comprehensive policy adds own-damage cover for your own vehicle on top of that, at a premium insurers do compete on.
A Compulsory Personal Accident cover of ₹15 lakh for the registered owner-driver rides along with either policy type, at a standard premium of about ₹750 a year — unless you already hold a separate personal accident policy of that size.
| Life | Health | Motor | |
|---|---|---|---|
| Required by law | No | No | Third-party portion only |
| What a claim pays for | A fixed sum assured, once | Actual medical bills, up to the sum insured, each year | Repair costs or third-party liability, per incident |
| Typical waiting period | None for death cover; free-look is 30 days | 30 days initial; up to 36 months for named pre-existing conditions | None to start cover |
| Main tax section | 80C (premium) & 10(10D) (payout) | 80D (premium only) | No direct deduction |
| GST since 22 Sep 2025 | 0% (individual) | 0% (individual) | Unchanged |
