Is Shubh Muhurat an auspicious investment for your child’s marriage?

Marriage remains at the centre of Indian social and family life. And it is perhaps the second costliest expense for most families after house purchase/home loan commitments.

According to a report from investment banker Jefferies in 2024, the Indian marriage market is valued at $130 billion, next only after food and groceries in term of consumption.

The average Indian marriage is estimated cost Rs 12 lakh according to the report.

However, in practice, for most middle class and affluent families, it could range from Rs 25 lakh to Rs 1 crore or higher.

Therefore, saving for this all-important goal becomes crucial for parents, especially when we take inflation into consideration. Starting off early will give ample time to save reasonable amounts over longer timeframes to accumulate a healthy corpus.

In this regard, Tata AIA Life Insurance has recently launched a new solution – Shubh Muhurat, a combination of two products – catering specifically to needs of saving towards marriages.

It has interesting features such as milestone payments, capital guarantee, protection under married women’s property act and a benefit protection rider.

A combination pack

As mentioned earlier, Shubh Muhurat is a combination of two products or plans. Essentially, it functions as a unit linked insurance plan (ULIP).

So, it is a combination of insurance and investment. The insurance part provides life protection in the event of an unfortunate event, while the investment portion is executed via investing in fund choices offered by the insurance company.

So, you would choose a fund and keep investing over the years to accumulate a corpus to be used for your child’s marriage. In the event of death/disability during the premium paying period, the insurance part would come for protection.

Like all ULIPs, Shubh Muhurat will have a minimum lock-in of five years, during which no withdrawal would be possible. It is also the minimum premium paying period.

There would be fund management charges (capped at 1.35 per cent), apart from policy administration, mortality, premium allocation, riders, premium redirection, switching, and a few charges.

Shubh Muhurat would provide milestone payments related to various marriage-related expenses – booking of marriage hall, hosting ceremonies, food and drinks, jewellery, apparel and accommodation, among others – as and when required.

The capital guarantee feature that the premiums paid would be protected even if the markets correct.

You also get the MWPA (married women’s property act) protection while opting for Shubh Muhurat. So, the amount accumulated in the policy is safeguarded from the claims of any external lenders or creditors. This way, the corpus remains safe from creditors.

The benefit protection rider is quite useful during the premium payment period. There is an immediate death benefit offered. Also, in the case of unfortunate events, there is a premium waiver benefit, ensuring policy continuity. The maturity benefit passes the proceeds to the nominee.

How Tata AIA funds fared

Since any ULIP’s performance is dependent on the underlying funds in which the investment portion is parked, it is important to note how some of these funds have done.

Data from Morningstar rating of ULIPs gives an indication. Taking those funds from Tata AIA that are rated 4 or 5-star, equity funds (multi-cap, mid cap, large cap etc.) have delivered 11.5-16.8 per cent returns annually over the past 10 years, on a point-to-point basis. Debt and balanced allocation funds have given 6.3-10.5 per cent returns over the same period.

The post-COVID performance of the equity funds is especially impressive with funds giving 25-32 per cent returns over the 5-year period.

The Tata AIA Top 200, Whole Life Midcap Equity, Life Large Cap equity were among the best performers. There are thematic funds based on consumption and other segments as well.

Of course, these are just fund returns. For ULIP policyholders investing in these funds, the net returns would be lower due to other charges mentioned earlier.

Should investors opt for it?

In general, from a healthy financial planning perspective, it is never a good idea to combine investments and insurance.

For goals that are far off into the future, such as child’s marriage (that is, say 15-20 years away), investing in mutual funds would be ideal. More so because expenses are Taking the active flexi cap or even midcap index funds over such long timeframes can be quite rewarding.

There are also dedicated hybrid mutual funds dedicated to saving towards children’s goals, mostly with a lock in.

The expense ratio is transparent and the NAV is calculated after including all costs. Direct plans come with much lower expenses.

For covering risk, a term cover with sum assured that factors in children’s goals – college education, marriage etc – would do for most investors.

If investors are left with any surplus after exhausting the mutual fund route for saving towards key goals, they may consider small investments in Shubh Muhurat, if only for the reasonably healthy returns of the funds run by the insurance company.