The Life Insurance Corporation of India (LIC) experienced significant inflows, surpassing Rs 1,100 crore, on the first day following the repeal of the Goods and Services Tax (GST) on individual traditional life insurance policies, as reported by The Economic Times.
The recent surge in monthly premium income is striking when compared to the ₹5,000 crore earned by LIC from retail policyholders in August 2025. This increase highlights a significant shift in the company’s financial performance.
On September 22, 2025, the GST exemption came into effect under a new two-rate structure, covering term, unit-linked, and traditional life insurance products, as well as health covers such as family floater and senior citizen plans. Instead of any new product launches, the majority of the surge has arrived from regular endowment products.
Before the amendment in tax, the early September sales of LIC were lower compared to the previous year, as customers and agents delayed purchases in expectation of the GST exemption.
The initial September sales of LIC have dropped from a year earlier as agents and customers stopped purchases in anticipation of the tax change applicable since September 22.
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When the regime was enacted, the pent-up demand was released quickly, which resulted in an inflow. It takes months to determine the long-term trend for the sector. In recent months, the sizes of insurance tickets have surged, and the exemption is anticipated to make the products of insurance cheaper, which motivates higher annual premium commitments for certain buyers.
The number of policies issued has been reduced even after higher ticket sizes and surged inflows. During April-August 2025, the new business premiums have risen by 6.2% compared to the same period last year, which has been driven by rising ticket sizes instead of the policy count.
There is a 10% rise as reported by the Private insurers, LIC’s new business premiums have risen to 3%, Life Insurance Council cited. In April-August 2025, industry new business premiums have increased to 1,63,461 crore from 1,54,193 crore a year ago, despite a fall in the number of policies by 8.9%.
