LIC Update: LIC gets Rs 1,100 crore boost after GST is withdrawn on life insurance..

Life insurance company LIC has benefited from the implementation of new GST rates. On the very first day after the tax on life insurance policies was reduced to zero, the company received investments of over ₹1,100 crore, nearly double the previous month's total. In August this year, monthly premiums from retail policyholders reached ₹5,000 crore. Most sales came from regular endowment products; no new products were launched.

LIC officials stated that initial sales in September were lower than last year as agents and customers awaited the tax changes that came into effect on September 22nd. The tax repeal brought back pent-up demand. However, the overall trend for the insurance industry will only become clear in a few months. The GST Council has placed all individual life and health insurance policies in the zero-tax category, effective September 22nd, 2025. This exemption will be available under a new two-rate structure. This includes term, unit-linked, and traditional life insurance, as well as plans like family floater and senior citizen health cover.

Benefits to Companies
Insurance companies have seen premiums increase in the past few months. Due to tax exemptions, insurance companies are hoping that lower prices will encourage some customers to increase their annual premiums. However, this is less likely to happen with term plans, as coverage there depends more on income and protection needs.

New business premiums increased by 6.2% during April-August compared to last year. This was due to higher premium amounts, even though the number of policies issued remained slow. According to the Life Insurance Council, private insurance companies saw a 10% increase, while LIC saw a 3% increase. Overall, new business premiums increased to ₹163,461 crore in April-August 2025, compared to ₹154,193 crore last year. However, the number of policies issued declined by 8.9%.

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