Zero GST on Travel Insurance? All You Need to Know

Does GST Affect Your Travel Insurance Premium?

Goods & Services Tax or GST is a service tax which is added to your travel insurance premium during payment. Until September 22nd, 2025, it was 18% and applicable to your trip insurance policy and services. However, the change in GST policy now exempts several insurance products, including travel insurance. This GST exemption is valid for new individual travel insurance policies, including senior citizens and family travel insurance plans.

Other than newly issued travel insurance policies, the GST exemption is applicable to several life insurance, health insurance and personal accident insurance plans.

Travel Insurance Premiums: Before vs After 0% GST?

These examples show how add-ons, discounts and the base premium influence the final cost.

To give you a better idea, this is how different decisions affect your travel insurance premium amount:

Why GST is Important when You Buy Travel Insurance

If you're wondering how GST interacts with insurance premiums, then it's important to understand the "service" component of your policy. This is essentially the premium minus certain non-taxable fees.

This also means that even a modest premium hike via GST can affect your travel insurance premium, especially if you are a frequent traveller or go abroad for long durations. Earlier, a GST of 18% was applicable on the base premium of your policy. With the new GST reforms, it will help reduce the policy costs, making it more affordable.

What Parts of Your Travel Policy are Taxable?

Simply put, you are taxed GST on the base premium. GST is calculated on this base premium, and the overall payment you make is your final amount. These are some factors to consider:

• Add-ons purchased
• Discounts offered by the insurer
• Specific fees and government levies
• Currency adjustments

With GST exemption on travel insurance, travellers will no longer need to pay the 18% GST when the new generation GST 2.0 reforms are introduced.

Earlier, your amount would change if you had add-ons and optional coverages. The same was true if buying extra benefits like adventure sports coverage, coverage for a pre-existing disease, cruise extensions or any kind of extra coverage. All these would add to your base premium, automatically increasing the taxable amount.

Some insurers also offer discounts. These were applied before GST and help reduce the base amount. It's also important to understand the non-taxable elements of your policy. These can be Government levies, stamp duties, or specific fees that might be excluded.

Key Factors that Influence Travel Insurance Premium

Until now, the base premium determined how much GST would be calculated on it. Even though GST will be exempted now, it is still important to understand the factors affecting your base premium and how to keep it low without compromising your coverage:

• Your Trip Duration: Longer trips mean a higher chance of facing an emergency, which increases the risk of raising claims. This means a higher travel insurance premium.
• Where are you Going: If you're travelling to an expensive, well-developed country, then it is likely to have costly healthcare. This means higher risk, which in turn hikes your policy cost.
• Your Age: If you're in your 20s or 30s, your premium won't be too high. However, older travellers need to pay more because they are at a higher risk of falling sick, getting injured or facing issues during their trip.
• Sum Insured & Coverage Limits: A policy with higher medical cover will cost more. Similarly, opting for comprehensive benefits will raise the premium. You can avoid purchasing plans after risk assessment or avoid buying add-ons with similar coverage to keep the premium low.
• Adventure/Risky Activities: Most plans don't cover risky adventure sports like scuba diving, trekking, skiing, etc. If you buy special coverage via an add-on, then it will add to the taxable cost. If you don't have any activities planned, then avoid buying a plan which covers them.
• Pre-existing Medical Conditions: Most travel insurance companies in India don't cover PED or pre-existing diseases. However, some offer add-ons at an additional premium. Also, disclosure often means higher underwriting and premiums, which can add to your travel insurance GST.

Tricks and Tips to Reduce Your Premium Cost

• Buy Early: Insure your journey as soon as you are done booking flights and hotels. It gives you time to compare different plans as well as coverage for issues like trip cancellation.
• Go for Lower Deductible: Having a small deductible reduces your premium cost.
• Avoid What's Extra: Don't buy unnecessary add-ons just because it is recommended to you. Get it only if you feel you may expect to use it during your trip.
• Pick the Right Policy: Use annual multi-trip policies if you travel often, rather than multiple single-trip ones.
• Check for already-included Cover: If you have credit cards, they may have certain travel insurance benefits. Similarly, check your employer's policies for travel-related benefits. In case you have plans or credit/debit cards, check if they already offer you some protection. You can then look for a policy with different benefits.

Checklist: What to Verify Before You Pay for Your Policy

Once you have decided on the best travel insurance plan for your journey, make sure to keep the following in mind:

• Confirm that your journey dates and traveller information are accurate (age, destination zones, duration).
• Ensure all optional covers you want are correctly included if needed.
• Understand cancellation/refund policies in case you need to cancel your trip or it is cut short.
• Check how much the payment methods are costing you. Most forex cards have service fees, etc., which might add up.

Comparing Travel Insurance Policies Not Just By Price

• Benefit-to-Cost Ratio: Picking the cheapest travel insurance plan is not always a good idea. A slightly more expensive policy might be a better value if it has more comprehensive benefits.
• Read the Fine Print: Don't be lazy with policy wording. They will tell you exactly what's covered, but even more important arethe parts that are not covered by travel insurance plans. Exclusions, especially for adventure sports, pandemics, and medical expenses, are the most important.
• Claim Process Transparency: How easy is it to make a claim? Are there requirements that could delay or limit the claim amount? You should read real travel insurance reviews and make an informed choice.
• Support Services: Does your insurer offer 24/7 helpline? If so, how prompt are they with emergency assistance, how wide is their hospital network abroad, etc. are some important factors to keep in mind.

Conclusion

With zero GST, travel insurance premiums will definitely be more affordable for upcoming journeys. You can further reduce the cost of your trip insurance policy by carefuly comparison and removing. All this is possible while still getting solid coverage. So always make informed decisions, compare plans on Policybazaar (and beyond price), and travel with confidence.