A Monthly Savings Plan for Your Daughter's Wedding

2024-12-01

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A daughter’s wedding is one of the most beautiful celebrations in a family. You dream of giving her a grand wedding filled with love, joy, and unforgettable memories. Many parents start saving gold or money with this dream in mind, but it is not enough. The real question is how to plan smartly and early so that you can give your daughter the best wedding memories. In this blog, we will discuss the same. Stay tuned

Key Takeaways

Start saving early and set a clear budget for your daughter’s wedding.
ULIP plans offer growth, life cover, and tax benefits in one investment.
Keep the annual premium within ₹2.5 lakh and below 10% of the sum assured to stay tax-free.
Utilise smart ULIP strategies to safeguard your investment against market volatility.
In the event of your absence, ULIP ensures that your daughter still receives the full maturity amount.

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

What is the Definition of a Financial Wedding Goal?

Planning your daughter’s wedding begins with setting a clear financial goal. A lavish wedding includes multiple expenses, including venue, décor, outfits, jewellery, catering, and more. To prepare well, you need to estimate how much you are based on your lifestyle and expectations.

In cities like India, families often plan wedding budgets that start around ₹15 lakh and can go much higher, depending on the scale of the celebration. Once you assign a number to your goal, you can start planning how to reach it with the right investments.

This planning can begin by assessing the number of years you have before your daughter is ready for the next chapter of her life. This can be found out by deducting your daughter’s present age from the probable marriage age. For example, if your daughter is five years old right now, you may have approximately 20 years before she begins to think about marriage. This is the time to set aside money for your savings to accumulate the funds you need for this goal.

Based on this timeframe, if your current budget is ₹15 lakh, 20 years from now, you will need approximately ₹54 lakh to maintain the same standards. Considering your current savings for the goal, you can either leave it as is or consider transferring it to the new investment plan.

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What are the Investment Plans 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: You should be able to set it up once and let it grow on its own, without needing frequent reviews or adjustments.
Safeguard the growth of your investment: It should protect your returns from sudden market dips and ensure consistent growth through a balanced investment strategy.
Safeguard your daughter's goal: During critical times, the investment should continue and provide the full amount at the right time.
Provide maximum tax efficiency: It should help you save on taxes under applicable sections while keeping the maturity amount tax-free.

There is only one investment option that can meet all four conditions simultaneously, the ULIP investment plan.

What is ULIP Investment Plan?

A Unit-Linked Insurance Plan for investment is a plan that offers diverse investment options and tax savings under Sections 80C and 10(10D). ULIPs offer multiple fund options to allocate your invested money according to your risk appetite and comfort level.

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

What is the Working Mechanism of the ULIP Plan?

If you want to accumulate around ₹54 lakhs in 20 years for your daughter’s wedding, ULIPs can be a smart and tax-efficient option. Assuming an average return of 8% per year, you would need to invest about ₹9,000 each month, or around ₹1.1 lakh annually.

When investing in a ULIP, you should keep two important things in mind:

Maintain tax-exempt status:

ULIPs offer tax-free maturity under Section 10(10D), but only if certain conditions are met, especially for plans purchased after February 1, 2021:

Your total annual premium across all ULIPs should not exceed ₹2.5 lakh in any financial year.
For each policy, the premium must not exceed 10% of the sum assured.
If either of these limits is crossed, the maturity amount becomes taxable as capital gains.

Example: If you invest ₹1.1 lakh per year and your sum assured exceeds ₹11 lakh, your plan remains fully tax-exempt. Also, ensure your sum assured is always at least 10 times your highest expected annual premium.

Keep flexibility to invest more:

ULIPs enable you to invest additional funds through top-ups. But to keep the tax benefits:

Your total premium (base + top-ups) should stay under ₹2.5 lakh in any financial year.
The total annual premium should always be within 10% of your sum assured.

This way, you can boost your savings without losing tax advantages.

Quick Summary: ULIP tax rules (2025)

Condition	Is Maturity Value Tax-Free?
Annual premium ≤ ₹2.5 lakh AND ≤ 10% of sum assured	Yes
Annual premium > ₹2.5 lakh in any financial year	No (Taxed as capital gains)
Annual premium ≤ ₹2.5 lakh BUT > 10% of sum assured	No

How Will Protect Your Goal?

As the wedding date approaches, protecting your savings becomes just as important as growing them. ULIP plans offer smart strategies to safeguard your goalskeep your goal safe from market risks.

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: that allows you to lock in 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 initially selected. 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.
The safety switch option: automatically transfers all your money from equity funds to liquid funds in the final four years of your policy. Therefore, the funds you have accumulated remain safe from market fluctuations as you approach your goal.

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

Let’s Understand with an Example

For example, consider that while investing ₹ 1.1 lakh a year, you will have a life cover of ₹ 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.

Conclusion

Your daughter’s wedding is one of the most cherished events in your life. With early and smart financial planning, you can turn this dream into reality. A ULIP investment plan by Canara HSBC Life Insurance helps you build the right savings, secure your goal, and enjoy tax benefits while staying protected from market ups and downs. Now is the right time to begin planning for the future you envision.

Talk to our advisor today or get a personalised quote to start your journey towards a grand and joyful celebration.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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