GST & Labour Costs: Is Your LIC/SBI Policy Pricier?

Rising GST costs, higher employee expenses, and shifting product trends at insurers like SBI Life mean your life insurance premiums may creep up — and your ULIP could quietly underperform traditional plans.

Here's what happened: Major life insurers are seeing their cost ratios rise due to 18% GST on operational expenses, higher employee costs under new labour codes, and increased reinsurance charges.. ULIPs — market-linked insurance products — are losing market share to traditional guaranteed-return plans as buyers seek certainty amid market volatility.. Despite rising costs, insurers remain profitable, partly by writing large group protection deals — but these deals can weigh on per-policy margins over time..

What you should do: Check your ULIP policy statement for the total expense ratio (TER) and fund management charges — anything above 2.25% annually is eating your returns significantly.. Compare your life insurance plan's IRR (internal rate of return) using a free online IRR calculator — if it's below 5.5%, a term plan + SIP combination likely beats it.. Call your insurer before your next renewal to ask if premiums are being revised — get the revised schedule in writing so you can budget or switch before the lock-in renews..

Under IRDAI rules, insurers must disclose all charges in a standardised benefit illustration — demand the 'illustrated yield net of charges' figure before buying any ULIP or endowment plan.