It is time to 'March' ahead!!!!

[Pratik Gupta]

It is that time of the year, when calculators come out of the drawers, excel becomes the hottest thing ever and tax consultants make obscene amount of money. Yes, you have guessed it right, this is March. A month
which has IPL 3, but for once that is not the most important reason
behind the importance of this month...To remind you, this is also the
month that most of us pay our taxes in!!!!

In this context, getting hold of proper tax saving instruments become very
important...Investments are made and declared and we 'donate' our hard
earned money with a lot of grudge against the government...Insurance,
is a widely used instrument in this period.

Over the last couple of weeks, when I myself have been losing sleep over how to save taxes,
have often hit upon the idea of buying insurance policies. It is here
that I started thinking about all the ads of various products from
insurance companies.

Insurance, is a negative reinforcement product. This means that Insurance is bought to avoid the aftermaths of
an unwanted situation, like death, accident, and in most cases taxes.
The underlying emotion or sentiment belying an insurance buying
decision is fear. We fear that we might not be able to support
ourselves financially if the earning member/s of the family are no more
there, and hence we buy an insurance policy!!!

Now if we have noticed carefully, none of the insurance ads, with a few aberrations,
even remotely speak of this. Insurance ads are mostly feel good ads
where a daughter is shown gifting her father a bigger and better car. A
grandfather who wants to extend a helping hand to his grandson who is
about to trip, is stopped by the father, et al.

There is a reason to it.


Research shows that we, as consumers do not prefer to see negative messages on
television. We do not empathise with them. What happens is that we form
a very clear demarcation of 'them' and 'we'. If an ad shows a death, we
analyze that it happenned or can happen to 'them' (the characters
potrayed in the ad) and not us. Also, the average Indian consumer, is
pretty egoistic when it comes to his/her family. In the case of
insurance, the decision maker is mostly, the earning member of the
family, that is largely, the male. If we look carefully, there is a
good amount of ego massage that is done by these ads. How? Recollect
the HDFC Standard Life "Sar Utha Ke Jiyo: ads.

One aberration in recent times, has been, again, HDFC Standard Life. The ad shows two
friends. One is going on a tour, and the other friend is seeing him off
tha the airport. They discuss what will happen to the family if the
friend does not return from the tour at all. To me, this ad is a very
blatant and in your face kind of an ad, that drives home the point
without mincing or sugarcoating words. I am eagerly looking forward to
the kind of reaction that the ad stirrs!!!

Till that time, I shall continue contemplating on which insurance to buy, how much
investments to declare, etc. Ads or no ads..Life, you see, has to
'March' ahead!!!!

[Pratik Gupta]

Thanks Saurav...Great insights!!!!

[Saurav Jalan]

Nice post. What I personally feel is that investing in LIC is a pessimistic form of investment(emotionally). There are many other instruments in which you can invest in order to avail exemption under 80C. PPF or EPF(in case of working professionals). Mutual funds with a lock in period of 3 years if you are not a risk-averse person. Moreover, there are certain FD schemes also but it depends upon their lock-in period. Personally, I feel that blocking your money for more than 3 years doesn't make sense as somebody has rightly said :

"Sales is Vanity"
"Profit is Sanity" and
"Cash is Reality"

[indraneel]

Nice article Pratik.

Just one thing regarding that HDFC ad. See I was not able to relate to the ad. May be it is because of the 'we' and 'them' factor that you mentioned.

But the fact is I cannot imagine a friend of mine saying 'what if you never return from a tour' when I am on the verge of taking one. It just did not appear realistic.Every discussion has a proper time and place. It is because of that reason that 'friend' in the ad always remained the HDFC agent in my mind and not my friend who cares for the well being of myself and my family.

Well written once again and keep up the good job.

PS: I have been trying to contact you for almost a fortnight now, would be a real pleasure if you can kindly call back.

[Prahlad Agarwal]

well written... one of the popular tax saving instruments in India is "NABARD Bonds".. they are 100% tax free and provides a CAGR return of 12-14% (please check the offer document for precise details)

[Pradeep Vasudevan]

Dada!,

Good article....

I hate the month of March, along with so many other things that I manage to hate and be hated!...

I hate March not for a Taxing month, I took care of it by conveniently avoiding it :) Thanks for intelligent financial managers of Bertling.

I hate march for another reason. It has five damn weeks!... and so many ***king working days which means that I have to send 5 weekly report in a month!...

Feb is the best! Hardly 20 working days and only three weekly reports!... every month should be Feb!