News Analysis

GST impact: Go for online term policies to cushion the blow

Radhika Merwin BL Research Bureau | Updated on January 27, 2018 Published on July 05, 2017


Online policies are about 40% cheaper than offline ones

Post-implementation of GST, premium rates of insurance policies have inched up.

The service tax of 15 per cent that was charged earlier is replaced by GST of 18 per cent. While you have no choice but to cough up extra on your term insurance plans, opting for online policies can mitigate the price rise to some extent.

Online policies have always been 30-40 per cent cheaper than offline options. Post-GST, the 3 per cent increase in tax will pinch you less if you opt for online plans.

According to data shared by, online term insurance policies are still about 40 per cent cheaper than offline policies after accounting for the higher tax under GST.

Hefty price differentials

Online term plans have always been cheaper than the offline options because there is no intermediary involved, and hence the commission paid to the agent/broker in an offline plan is not there in the case of online polices.

Post-GST, the premium rates of term policies indicate the stark differential between offline and online policies.

For a ₹1-crore sum assured, a 35-year-old male (non-smoker) will have to shell out an annual premium of ₹39,648 (including GST) under LIC’s Amulya Jeevan 2, which is its offline pure term plan. The same under LIC’s eTerm plan, an online policy, will cost him ₹23,430, about 40 per cent cheaper.

Max Life’s Super Term Plan — an offline policy — for the same sum assured of ₹1 crore, for a 35-year-old male (non-smoker) will cost ₹19,470 now. Max Life’s online plan — Online Term Plan Plus — will cost him a lower ₹11,564.

However, for insurers that offer the same term policy both online and offline, the difference in premium is only about 5-6 per cent. For instance, HDFC Life’s Click 2 Protect 3D Plus offline option costs ₹14,298. The same policy online will cost ₹13,511, about 5 per cent cheaper.

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Published on July 05, 2017
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