A Monthly Savings Plan for Your Daughter's Lavish Wedding

Weddings are one of the grandest family affairs in India. Especially when it’s about your daughter, you wouldn’t want to leave anything unfulfilled. Parents start dreaming about their daughter’s grand weddings, start saving gold for her, but the question remains how do you plan for a grand wedding of your daughter early enough?

A sufficient life insurance can be of great help in achieving your future goal. Read on to find out how.

Define the Wedding Goal Financially

The answer is simple and based on your present experience and future ambition. Your first objective is to assign a number to the money you are ready to spend on your daughter’s wedding. The current average budget for families in Delhi range between Rs. 15 lakh and a crore.

Once you have decided a number you will need to put a number to the time you have before your daughter is ready for the new chapter of her life. This can be found out by deducting your daughter’s present age with the probable marriage age.

For example, if your daughter is five years old right now, you may have approximately 20 years before she will think of marriage. This is the time you can give to your savings to accumulate the money you need for this goal.

Based on this time if your present budget is Rs. 20 lakh, 20 years from now you will need about Rs. 54 lakhs to meet the same standards. Coming to your present savings for the goal, you can either leave as is, or consider moving it to the new investment plan.

Investment Plan for Your Daughter’s Marriage

When you have 15 to 20 years to save for your financial goal, you have multiple investment opportunities open for you. However, you want only the safest way to reach the goal, even if you have a high-risk appetite for investments. You would want the investment to:

• Work without your regular involvement
• Safeguard the growth of your investment
• Safeguard the goal of your daughter
• Provide maximum tax-efficiency

There is only one investment option which can meet all four conditions at the same time, and that is ULIP investment plans.

What is ULIP Investment Plan?

Unit-Linked Insurance Plan for investment is a plan which offers diverse investment options and tax savings under sections 80C and 10(10D). ULIPs have multiple fund options to allocate your invested money as per your risk appetite and comfort.

Being a life insurance plan, ULIPs also offer death benefit to the family, ensuring your goals are met even in your absence. These features allow ULIPs to help protect your family’s goals in case of mishaps and support your family financially.

Using Invest 4G ULIP Plan

Canara HSBC Life’s Invest 4G is one ULIP plan which can help you protect your daughter’s marriage goal. Invest 4G also fulfils all four conditions for an ideal investment plan for your daughter’s marriage goal.

Consider this case to understand how it works

As per the earlier estimates, we need to accumulate about Rs. 54 lakhs in 20 years to meet the daughter’s goal. If you are starting to invest for this goal with this plan, and expect a reasonable return of 8% per annum on your investment, you will need to invest approx. Rs. 9000 every month to collect this much money.

Thus, every year you will invest about Rs. 1.1 lakhs in this plan. Now you have two objectives to take care of:

• Maintain tax-exempt status of your plan
• You can invest additional funds in the future whenever you can

Remember that the maturity value is tax-free under section 10(10D) provided your annual investment in the ULIP plan are below 10% of the sum assured (life cover) of the policy.

Thus, your life cover should be slightly higher than 10 times of your annual premium. So, that in future if you need to invest additional funds for the goal, you don’t lose the tax status of this plan.

How Will Invest 4G Protect Your Goal?

Invest 4G protects your financial goal in two ways:

Protects your investment

You can select one of the four investment strategies this plan offers. These strategies can benefit your investment from equity market performance while safeguarding your gains:

• Systematic transfer option for those who prefer annual or semi-annual mode of investment
• Return protection option where you can lock your returns at a specific rate. The plan automatically moves your money from equity fund to debt fund as your investment reaches the return goal.
• Auto fund rebalancing will rebalance your portfolio of equity and debt funds to the ratio you decided in the beginning. Thus, if your equity portfolio gains better value, the gains will transfer to safer investments. The opposite will happen if markets don’t perform better than debt.
• Safety switch option automatically moves all your money from equity funds to liquid funds in the final four years of your policy. So, the funds you have gained remain safe from market movements as you approach your goal.

You can use this option with any of the other three investment options.

Protection for Your Goal

Invest 4G plan offers not only a life cover for your plan but also offers to protects your premium payments in case of your early demise. Premium protection in the plan ensures that the investment continues towards the goal as intended, even after your death.

For example, consider that while investing Rs. 1.1 lakh a year, you chose a life cover of Rs. 15 lakhs for the 20-year plan. If a death claim is filed in the 10th policy year, your family will receive:

• Rs. 15 lakhs in the 10th policy year as the death benefit
• The policy will continue without a life cover and premium payments from the family
• The insurer will invest all the remaining instalments into the plan
• Your daughter will receive the funds at maturity (Rs. 54 lakhs in this case) as she would have if you were there investing in the goal.

Thus, investing in ULIPs like Canara HSBC Life’s Invest 4G ensures not only the safety of invested capital but also the safety of the goal.