Primerica Review – A Messy Scam or Just An MLM Mess?
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For the life of me I cannot understand why they call it “Life Insurance“. I am serious folks, it's impossible to insure “life”. When you die, you are done. It cannot be fixed like a car after an accident and some insurance company pays for the repair.
That's a fact that cannot be refuted. So what is the purpose then to buy a life insurance policy? The two main reasons people usually buy life insurance are ….
1) to cover their funeral expenses and
2) to provide their family and loved ones with sufficient financial support in case of premature death, AND to accumulate significant savings for life after retirement.
Insurance companies offer two kinds of policies that cover your needs:
- Term Life Insurance come with relatively low monthly premiums and pay the coverage amount ONLY in the case of death before expire date.
- Whole Life Insurance with higher monthly premiums that pay the coverage amount in the case of death, but accumulate cash value you can borrow against to provide funds for education or other future goals.
From 1940 to 1977, people purchased whole life insurance to secure income for their family in case of untimely death and to subsidize their retirement planning. Term insurance wasn't very popular or even known in those days.
History Of Primerica
In 1977 A. L. Williams figured out a way to make founded, together with 85 associates, their own company: A.L. Williams & Associates.
His philosophy was “Buy Term Insurance and invest the difference“. He created a monumental MLM opportunity with an army of part time agents to convince customers to switch from their whole life insurance to term policies.
Within two short years, ALW Marketing became the largest seller of life insurance in the U.S. with over 100,000 agents.
L. A. Williams, now a Billionaire, made most of his fortune from investments in Citigroup, of which he owns over 20 million shares.
Primerica is a publicly traded company on the New York Stock Exchange under the symbol “PRI” and it is listed in a good standing with the BBB.
The Primerica Products:
At the inception of A. L. Williams & Associates, the main focus was the sale of term life insurance. But as Primerica grew they started to offer a variety of other products:
- Financial Needs Analysis
- Auto & Home Insurance
- Long Term Care Insurance
- Primerica DebtWatchers
- Pre-Paid Legal Services
I may be missing some but you get the picture. They offer a wide range of products.
How Does The Primerica Business Opportunity Work?
Unfortunately or fortunately depending on your point of view, Primerica functions as a typical MLM!
They have an 11-level upline system that will get you “kickback commissions” from your recruits, your recruit's recruits down to the 11th level (as outlined in their “Primerica Final Prospectus”, filed April 2, 2010).
Primerica DOES NOT employ salaried agents to sell their products, nor do they contract with independent insurance agencies. Instead, they build their sales force under the premise to offer a job opportunity. And here is how that works.
Someone you know (a friend or family member) tells you about this great opportunity to start a new career and become your own boss. He/she invites you to a meeting in which you will find out the details.
In typical fashion, these meetings take place in a conference room at a Holiday Inn or Best Western hotel. There is the usual build up of hype and excitement, and you sign up to become an agent for Primerica.
What are the Primerica Start Up Costs?
At the time of this review you pay $99 to join, plus $25/month for the Primerica Online support system. In Canada, the fee is $103.95, plus $28/month for Primerica Online. These fees also include applicable sales taxes.
Part of the charge is a fee for a license you need in The U.S. to sell life insurance policies which makes sense. But at the same time, you are urged to take out a term life insurance for your self.
Remember, the person that recruits you needs to make a commission to feed his/her kids, the goldfish and dog, cat or bird they have. But at the same time it also makes sense that you own the product you sell in this situation.
The Primerica Complaints!
So you're probably thinking well everything must be sweet if the company is publicly traded and they're listed with the BBB right?
Not so fast, my friend. Before you jump in and try to swim with the sharks, let me tell you what I don't like about this whole Primerica thing.
Unrealistic Income Claims & Time Frames
Some Primerica reps likes to sell people on how easy it is to earn a six-figure income within a year or two by making a few sales per day.
But the reality shows us a different picture. Here is an excerpt from the official Primerica Income Statement for the year of 2013:
“…there is no guarantee that you will achieve any specific cash flow level. Most RVPs/representatives do not achieve the levels illustrated. From January 1 through December 31, 2013, Primerica paid a total of $536,506,140 in compensation to its sales force, at an average of $5,614 per life licensed representative…”
The average compensation of $5.600 per agent includes the income of the top earners.
Out of roughly 100,000 Primerica reps, there were 2818 earners that received compensations in the amounts from $1,000,000 (1 million) to $36,000 for the year.
- 28 made seven-figures ($1,002,832)
- 1,035 got six-figures ($100.056)
- 1,755 five figures (36.010)
ONLY 3% of all Primerica reps made a living income!
Now compare that to a, State Farm Insurance Agents Annual compensation – $30.000 to $67,000 (source: ehow – State Farm Earning Report). Makes you wonder.
The High Failure Rate
According to the Primerica Annual Report 244,756 new reps were recruited and 152,901 reps either quit or were dropped.
This accounts to a 60% failure rate within the first year. According to the U.S. Bureau of Labor Statistics the failure rate of start-up businesses is 14% – 19% and the survival rate for a normal business is 54% – 67% after 4 years.
Of course, not everybody taking the step from employment to being self employed will succeed. It does not matter what market or industry people try to start their own business, many will fail for manifold reasons. But it seems like you're more likely to fail with this business given their own stats.
Primerica's Products Are Overpriced
Back in the old days, good ‘ol Art was able to offer the cheapest term life insurance policies to a certain customer base to replace their whole life policies and have them invest the difference.
But times have changed, and other insurance companies offer 20% to 50% CHEAPER POLICIES than Primerica. This is probably because, they don't have to feed 11 upline levels of hungry reps.
To Sell or To Recruit, that is the question.
Like many MLMs it seems that many of Primerica's reps are trained and more focused on recruiting people into their MLM rather than pushing the actual products. It's probably easier to recruit people into the business since some of the products are overpriced. But I've always taken issue when an MLM focuses more on the recruiting because it leads me to believe their products aren't as good. That said it doesn't mean reps aren't actually pushing the products or making money with that alone. But the recruiting does seem to be more important.
You Do Not Really Own The Business
If you decide to leave Primerica, you will lose all your clients, their recurring commissions and you can sell your business only to another Primerica member (for a few pennies on the dollar, that is).
You Cannot Have Your Own Website
Primerica wants to control all aspects of your business and will not allow you to have your own website. In addition to that, they charge you $25 per month for the use of their server and pre-build website. Now this may be because of the fact you're selling financial products so by law they really need to monitor what you put out there to cover their asses. But from a branding standpoint it limits what you can do online. You're really going to need to hit the streets to make that money from selling the products. Or you can focus more on the recruiting aspect which is probably why you see more reps doing that part of the business.
Very HIGH number Of Complaints!
Now I'll be the first to admit that every company is going to have some complaints. It doesn't necessarily mean they're a scam or bad. But the sheer number of Primerica complaints I found online was staggering even for my liking. I read way over 500 complaints, and there were tons more I did not read.
For the sake of completeness, I show you two typical complaints, one from a customer and another from one of the Primerica reps.
I ask you to read some of the complaints yourself and let me know your opinion before you leave. These complaints should not be taken lightly. I agree that some may be unfounded or from “notorious complainers” (you know the kind of folks that always complain about water being too wet).
However, the sheer amount of complaints is a clear message: Something is not right in Primerica land
Is Primerica A Scam or Legit?
Technically it's not by the legal definition of scam. The customer does get a product. But are they getting the best product and the best price they can? That's open for debate.
The other aspect that can be argued is the validity of advice of giving up your whole life policy for a term policy and investing the difference. I'm not a financial advisor nor do I know your financial situation. There may be merit to using a term life insurance policy over a whole life depending on your situation.
I can see how some people would argue that a term life policy is a waste of money in the long run for most people. It seems like the insurance company would make out more times than not because the likelihood of those policies being cashed out before their term is very slight. So the life insurance company is basically collecting free money for the most part.
Whole life insurance always appealed to me because of the cash value, being able to borrow against it and many of the other features that make it more expensive than term. I feel as if I'm getting more for my money and that's why it cost more.
So again I can't really speak to your situation. The financial aspect of the Primerica philosophy can be debated either way. So I'll leave that to individual circumstances to determine the right path for you.
But from the business opportunity aspect, the cons I've listed above do give me pause. Although Primerica is a legitimate company, I personally walked away from their company after attending one of their hype sessions and doing my research. I didn't like the idea I was misled into believing we were going to be presented with a job opportunity which at the time is what I was seeking. So for me it was “no bueno”.
Of course, “Eddy with a y” cannot tell you what to do. If you think this is a good business opportunity for you, then give it a shot. But I ask you to consider the statistical data I showed you in my review.
- Do you really want to be one of the 150,000 that join every year, only to drop out a short while later?
- Do you really want to be one of the 100,000 reps making a meager 5 Grand a year?
Ultimately that's on you to decide. At least now you know what some of the negative things are that other reps may try to hide from you. You can go into this knowing full well what some of the pitfalls are.
Looking for an Alternative To Primerica?
If what you read about Primerica doesn't appeal to you, there are other options. I quickly discovered that when I opted against this company many moons ago. I've been making money online since 1998 but it's actually based on my passion and not pushing over priced products. I don't have to harass my family or friends or hit the pavement to make money. And that's just the way I like it.
If you want to make money online around something you love, you need to check out my My Top Free Work At Home Recommendation! It's totally risk free and you have nothing to lose if you decide it's not for you. So it may be something to consider.
I have no problems giving you other options and make no apologies for it. If you're on this site, obviously you're looking to make money and my job is to give you some other options that I have actually made money with. I'm very blessed to get paid to do so and I'm totally transparent about it.
Regardless, I try to be objective as possible when reviewing companies. This is why I've stated that Primerica is a legitimate company but it has some serious flaws that one must consider. If the flaws don't jive well with you feel free to consider My Top Recommendation. Either way you have choices. Don't feel pressured by any reps!
Like always, I would love to hear your opinion about my Primerica Review. So, chime in and leave a comment down below on your way out. I know there are some die hard Primerica reps out there and I welcome your feedback. Feel free to straighten out anything I may get wrong.
It's always good to have healthy debates. Hopefully the Primerica reps won't resort to some of the name calling or attacks I've seen other reps use because I don't just sing praises of their companies (ah hem Nerium reps, please stand up.)
That's it for today, folks. Thanks for stopping by.
Eddy with a Y