We have all been using toothpaste, shampoo, soap, malt drinks, Bournvita, Horlicks, Complan…..even though we may be new to life insurance, pension plans, etc.

If you see the pictures on the cover of the items that you buy you see pictures of how much to use. The toothpaste cover shows toothpaste from one end of the brush to the other. The shampoo bottles says use twice, Bournvita says ‘Two teaspoons’ etc.

However with time and age you experiment and find that lesser (in fact in some cases 60-80% less) does the job just as well. Obviously why does the industry ask you to consume more? So that you go and buy more Colgate, Meswak, Close-up, Lifebouy, Clinic,…..and their sales goes up.

Now similar thing happens when you ask a financial planner 2 questions:

– How much life insurance do I need? and

– How much money do I need to accumulate for my retirement?

Even though we live in a country where most people suffer from ‘Kam life insurance lene ki bimari’ many of our ‘salesmen-planners’ exaggerate the need for insurance and pension plans. So be careful, use your common sense and act responsibly.

Do not ignore every thing that a ‘salesman-planner’ tells you, but do not be blinded by what he (increasingly she) says. If you are a disciplined person with good saving / investing habits, my answer would be you do not need a pension plan commitment till you reach your 40s.

If you want to be sadistic and cruel (like a friend is) on the day of issuing the cheque ask the salesman / his boss / his boss’s boss to get their life insurance and pension plans. If they have all (or at least one) have taken a plan which is 10 times their income offer to match it. This should always work. These guys only sell, they never buy. Is that an indicator of how much life insurance you need? I do not know. It could also be those guys really do not know what they are doing 🙂