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Primerica: Have You Got Their Insurance?

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Primerica, originally an insurance company, has existed in Canada for number of years. Primerica’s main business lies within term life insurance, but other services are also provided: investing in Mutual Funds, debt consolidation and other. There are 3 other states where Primerica operates: the United States, Spain and Puerto Rico. The company was established in 1977 and was subsequently owned by Citygroup for many years. After the financial crisis developed, Citygroup started a heavy shake-out and subsequently had to sell Primerica. One of the many Warren Buffet companies seems to be the owner of Primerica today.

Speaking from a position of an independent life insurance broker, I would like to share a few thought on Primerica’s services and also the world of insurance business. If you make a simple search in Google about Primerica, you will find enough articles noting the company’s structure, but not as many being concerned with the company’s products. That’s why I decided to concentrate on their products before anything else.

The same product for everyone?

There’s not much choice with Primerica, regarding the insurance policies: only the Term Life Insurance policy is being sold. There’s nothing wrong with the term life insurance, but this policy simply cannot be the most accurate for just about anyone out there. There’s also the whole life insurance and the universal life insurance. Why does not Primerica offer them? To give an example, a child with permanent disability would definitely require a different type of life insurance than term life insurance, or those in situation when the insurance is needed to offset taxes on an investment property.

So how much is it again?

Number of Primerica policies cost by 30 or 40% more than similar policies of their competitors. That’s caused by the way the company does business, which I will discuss at the end of the article. But it’s not all that bad with Primerica, because it is one of the very few insurance companies that still offers 25 and 30 year term policies and policies for specific age groups are in fact quite competitive.

Convertibility

Yes, Primerica’s term life insurance policies are non-convertible, simply because there is nothing to convert it to (no whole or universal life is offered). You have a choice to renew your policy every time it expires, but the price will always level up a lot every time you do.

I believe these are the main flaws concerning the life insurance provided by Primerica. Do not forget that product is not the only thing that creates business. The conditions within the company are as much important. Let me explain what I mean.

Conditions within the company

Imagine you are at the beginning of your career and the choice is to be a financial adviser. Naturally you would like to be successful and also respectable in what you do. To achieve that, you need the following three conditions: 1) have enough knowledge, 2) being able to choose from a selection of products that fits the needs of your clients and 3) be financially motivated.

Condition 1: With Primerica, you only get a training lasting for just a few weeks that only prepare you to deal with the client. At the beginning you will not have much of an idea of what exactly you are selling, unless you’ve previously undergone some education regarding personal finances. Of course there are many experienced advisers within the company, but the truth is most of the clients are attended by beginners, since those more experienced mostly concentrate on building their own team of advisors.

Condition 2: Being employed exclusively by Primerica or any other insurance company out there means no choice of products to suit the customer’s needs. It makes no sense to me – to voluntarily limit myself to selling products of only one company. What if my clients need something else?

Condition 3: the commission you made do not fully belong to you, because there is a structure of people who recruited you, the people that recruited them, and so on. Additional 3 people will receive a portion of what you make. Therefore the reward paid to the actual seller is smaller than with competitive companies. So how to make the big bucks with Primerica? You surely know the answer by now: create your own team. Let me summarize: Primerica views its advisors as some kind of financial doctors, curing all the financial diseases of their clients. But have you ever seen a doctor that spends a considerable amount of time looking for other doctors instead of treating people? I have to ask again: if you really are serious about financial advising, why not do it full time without all this recruiting rubbish?

As I said before, I’m pretty sure there are some very good advisers out there in Primerica. My only point is that it is much easier to be a good financial adviser when you are not tie to any particular company, have accordant education and don’t feed additional three levels of advisers above you with your commissions.

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