Martin Bell was told in December 2014 that he must serve a minimum of 12 years in prison over the death.
A judge told Bell he had maintained a "callous silence" since the killing in May 2000.
Bell was hearing voices from God and believed in witches at the time he killed Gemma with a hammer at his home in Harrogate.
He then put her body in a bath and left it there for four days before sawing her legs off so he could fit it inside a hire car
Bell, who admitted manslaughter on the grounds of diminished responsibility, then put the body into the car and drove it to Brimham Rocks, near Harrogate, where he buried it.
Gemma was 23 at the time she went missing from her home in Harehills, Leeds, in May 2000.
She was last seen by a friend who said that Gemma told her she was going to visit a friend in Huddersfield for the weekend.
But she instead met Bell, who she had known for around five years, and caught a train with him to his home in Harrogate.
After the killing, Bell avoided the attention of the police for many years, leading a law-abiding life and setting up home with a woman and her children.
Bell walked into a police station in July 2014 and confessed to the killing before showing officers where he had buried Gemma’s body.
The court heard that Bell had been assessed by doctors who concluded that he had a psychotic illness similar to schizophrenia at the time of the killing.
The Recorder of Leeds, Judge Peter Collier, QC, said: "The killing of Gemma Simpson was brutal; your treatment of her body after death was dreadful; but your culpability was considerably diminished by your mental illness.
"You have described how, when younger, you took drugs, you got involved in occult practices and began to suffer what were clearly delusions."
The judge added: "The harm was the greatest possible - the loss of human life. The impact of that harm on the family of the victim is very high as for 14 years they have retained a glimmer of hope that she was alive but it was a false hope kept alive by your silence."