Policy Revival Surge: LIC Sees Rs 100 Crore Inflows After GST Waiver On Traditional Plans

In a major boost to the life insurance sector, Life Insurance Corporation of India (LIC) has recorded inflows exceeding Rs 100 crore following the government’s decision to scrap Goods and Services Tax (GST) on traditional life insurance policies. The surge, observed within days of the announcement, reflects renewed consumer interest in long-term savings and protection instruments.

The GST waiver, effective from September 25, 2025, applies to non-unit-linked policies such as endowment, whole life, and money-back plans. These products, previously taxed at 4.5 to 18 percent depending on premium structure, are now exempt, making them more attractive to middle-income and rural buyers.

Key highlights from the post-GST impact:

- LIC received over Rs 100 crore in fresh premium inflows within 72 hours of the GST rollback  
- Majority of inflows came from endowment and money-back policies, especially in Tier 2 and Tier 3 cities  
- Agents reported a 40 percent spike in policy inquiries and conversions across regional branches  
- The waiver is expected to improve policy persistency and reduce lapse rates over time  
- LIC has launched awareness drives to educate consumers about the revised pricing benefits  

Sectoral Implications And Consumer Sentiment

Industry experts view the move as a game-changer for traditional insurance, which had seen muted growth due to tax burdens and competition from market-linked products. The GST exemption restores affordability and positions life insurance as a viable savings tool once again.

LIC’s early gains are likely to be mirrored across other insurers offering similar products, potentially triggering a broader revival in the life insurance penetration rate.

Sources: Ministry of Finance, LIC Corporate Communications, Economic Times Insurance Desk, BusinessLine Financial Services Tracker.