Kotak Life CEO Mahesh Balasubramanian Says, Renewal Premiums will Also Be Exempt from GST, Effective Sept 22
With the new goods and services tax (GST) exemptions and the shift to the new tax regime with the upcoming introduction of Bima Sugam, the speed of buying and experiencing life insurance is rapidly growing. This growth has never been seen in the past.
In an interview with Moneycontrol, the managing director of Kotak Life Insurance, Mahesh Balasubramanian, highlighted the various impacts of these recent changes to policy and the key turning point from the insurer’s 25-year journey. Here are a few extracts from the interview:
“What will be the impact of the GST exemption on life insurance policies: traditional, non-traditional, and term plans?”
In answer to this question, Mahesh Balasubramanian said that the exemption from the goods and services tax (GST) is a milestone move. These reforms will enable the availability of insurance products at cheaper rates; more people will show their interest in insurance and increase their reach to people. Mahesh Balasubramanian showed his gratitude to the finance minister and the GST council for taking this major action.
In the short term, insurance companies may need to adjust their costs and review things like input tax credit. But overall, this move is very good for the industry. It supports the Life Insurance Council’s message, Sabse Pehle Life Insurance, by making insurance protection easier and more affordable for people.
“Around 60 per cent of the total premium collected comes from renewals. Will the GST exemption apply to renewals? How will it impact actuarial calculations for products priced under the earlier GST framework?”
In answer to this question, he said, they are still not confirmed; we are awaiting the official clarification, but according to their understanding, GST is also exempted on renewal premiums, effective from September 22, 2025. When it comes to actuarial calculations, all insurance companies are revising them. It is still too early to say much, but we will adjust once things become clearer.
“With the new tax regime, the default choice, what impact do you see on insurance sales? Since insurance is often a push product linked to tax savings, how do you see this changing?”
He said it is a misconception that insurances are merely used for tax purposes. Earlier, people mostly bought policies in March to save on taxes. But now, customers focus more on the Rs 5 lakh annual exemption for traditional plans and Rs 2.5 lakh for ULIPs, which are still attractive. So, while sales still rise in the Jan-March period, it’s more because of old habits in the industry than just tax benefits.
“Markets have been volatile. Are you noticing a shift in customer preference between term, ULIPs, and traditional saving plans?”
He said amendments in demand rely on interest rates and market trends. For instance, when long-term interest rates were high, traditional plans sold more. When the stock market was strong, ULIPs became popular. But overall, the shifts are small, about 5-6% either way. Strong insurers keep a balance between traditional plans, ULIPs, and term plans, and that’s the strategy we follow at Kotak Life.
