Disclosure: The writer of this article got his start in life insurance with Primerica Life Insurance Company, when it was part of Citigroup (pre-2008). Since that time, the writer has worked for other big names in insurance and has invested more time understanding the different types of insurance and strategies involved. While the products may have changed a little, the methodology and company philosophy has not. Any critique of the company comes from personal experience within the company and other former agents involved in the company.
Primerica’s term life insurance is a financially sound product, but you’ll see some major red flags depending on your situation:
- The term life insurance offering from Primerica can cost up 29% more than comparable term life insurance products.
- Primerica’s underwriting standard is not favorable toward people with less than perfect health histories.
- Many Primerica agents receive minimal training in matters of life insurance and estate planning.
- Agent training instead focuses on emotional sales tactics, with an intense focus on selling to family and friends.
If you’re considering a Primerica policy, you are better off researching their tactics or talking with an independent agent before making any purchases.
Here’s what you need to know about Primerica:
4 Things You Need to Know About Primerica Upfront:
1. Primerica is an MLM:
Primerica is a multi-level marketing company (MLM), similar to Amway or LuLaRoe. Reps for Primerica only become successful by recruiting as many people as possible. They build large teams so they can get “overrides,” or a cut of commissions. Their sales training is less focused on products and industry knowledge, and more on revenue stream recruitment.
2. Primerica is Expensive:
Compared to competitors with a similar pedigree, Primerica’s term life insurance is often more expensive. Compare these rates for a 35-year-old male non-smoker seeking $500,000 in life insurance:
Even for an insured in good health, a Primerica policy could cost them more than $18,000 in additional premiums versus a comparable competitor.
3. No Free Quotes
One of the biggest downsides to going with Primerica is having to speak to an agent directly to receive a quote. Primerica incorporates seeing this quote into their sales process. This means reps will likely try to recruit you to sell Primerica before you even know if the policy will work for you.
Before you meet with a Primerica rep, it’s best to get quotes from a few other insurers first. This way you’ll know your best fit and won’t buy into something that doesn’t work under pressure.
4. The Sales Process
Primerica’s training process is focused on learning scare tactics, rather than investment and insurance knowledge. Generally speaking, most agents have no exposure to the industry, focusing instead on emotion-based selling and exploiting personal relationships. Here’s what you need to watch out for:
- Research every claim they make. They’re selling you policies that you can get from nearly any other insurance provider.
- Don’t play into their emotional triggers. That’s one of their secret weapons.
- Watch out reps leveraging a sale based on a personal/family relationship.
Who is Primerica?
Primerica Life Insurance Company is a life insurance company based in Duluth, Georgia that focuses on multi-level marketing (MLM) to grow its market share and workforce. Their primary offering is affordable term life insurance. This is why Primerica targets middle-class families as their main demographic, attempting to not only sell a prospect term life insurance but also to recruit them to be a sales agent as well.
True to MLM form, it isn’t the person who sells the most policies, but whoever recruits the most people to sell Primerica products who becomes the most successful among other agents.
As a “Buy Term Invest The Difference” type of company, Primerica only sells term life insurance. They also actively campaign against other types of permanent policies, such as universal life and whole life. While Primerica’s term life insurance product is not a horrible product, it is often the pricing and the sales process that draw much of the negative attention from the insurance world.
Why Does Primerica Have A Bad Reputation?
As discussed before, much of Primerica’s issues don’t come from the term life insurance product. Many of their issues come from the sales process and operations of the company. Combine that with the pushy recruitment methods used on prospects to join their MLM structure, many people become quickly turned off to the company.
Professionals speak out against Primerica’s tactics when it comes to their “buy term, invest the difference” hard stance, saying that it is short-sighted and not always the best fit for every customer. While many insurance professionals aren’t opposed to the idea of term life insurance (many are advocates of it), complaints exist due to the manner in which Primerica agents spread inaccurate information and accuse other insurance professionals of being “scammers” if they suggest any type of coverage other than term during a financial review.
Ironically, the negative reputation Primerica carries is less about their term life insurance versus the way the company operates in general.
How Does Primerica’s Sales Strategy Work?
Primerica offers a variety of products that target the average middle-class consumer. Typically these are people carrying a fairly large debt load and are undereducated in financial matters. Primerica’s sales training focuses on exploiting this lack of education, targeting the demographic with one-sided insurance presentations. They also utilize emotional buying tactics. For example saying: “Don’t you want your family to be secure if you die?” Or, “So, you are saying you aren’t interested in protecting your family’s financial future?” The main focus for new Primerica agents is to sell the product to their friends and family. This is in hopes of capitalizing on that emotional relationship between and using that bond to further the market share.
One of the biggest concerns people have with Primerica is the quality of agents and their level of training.
The majority of Primerica’s sales force is part-time. This means they treat this endeavor as one may treat pet sitting or bartending, which causes issues in overall quality. The insurance and investments industry is a constantly evolving environment and requires there to be a significant focus on being up to date with some of these changes. For example, the Fiduciary Rule is a key issue that has a large impact on the sales of investments. If agents don’t receive proper training and knowledge of regulation changes, they run the risk of unintentionally harming a client.
When I joined Primerica in 2006, there was almost no training provided on insurance topics outside of the basic licensing class. The weekly meetings they hold are not insurance related informational meetings as much as traditional sales meetings that focus on the typical sales strategies you see in the insurance industry.
Because of this, agents begin selling a product they are largely unfamiliar with and in some cases, misrepresentation of the product occurs due to this lack of knowledge.
Are all Primerica agents this way? No, not at all. However, the lack of a dedicated sales force and the high level of agent attrition doesn’t help ensure quality when it comes to the face to face service need of a life insurance policy if the situation presents itself.
There is more focus on recruiting other people to be agents than actually creating and training higher quality agents. This pressure is extremely common in a multi-level marketing structure, which is how Primerica operates.
Very few people stay on the lower level of the Primerica structure, preferring to service clients and focus on sales. This is due to the low commission received from a sale vs. an “override”, or cut of the commission. This setup drives many serious insurance professionals to different life insurance companies, to expand their education and practice. This means that customers are often left “orphaned,” without an agent to meet with for future needs.
Nothing But Term Life Insurance:
Not only does Primerica solely provide term life insurance, but they train agents that anything other than term life insurance is bad. They believe this so strongly that they can become extremely hostile about this topic.
Primerica, in the training and philosophy, doesn’t properly educate agents on the proper application of various permanent life insurance products and how they can benefit customers, depending largely on where that customer is in their estate planning process. Instead, agents are repeatedly told that only term life insurance works for everyone, which isn’t always the case.
What Products And Services Does Primerica Offer?
Beyond their term offering, Primerica does offer other products, most of which are repackaged services from other vendors. These include investments and pre-paid legal services which is part of their marketing and sales processes. Here’s a full breakdown of their offerings listed below:
Financial Needs Analysis:
The Financial Needs Analysis (FNA) is 100% a marketing tool Primerica and others, like State Farm and Country Financial, use. They show you “gaps” in your insurance coverage and investment plans to help agents find areas to sell you products. In most cases, these types of presentations go by different names and are full of pretty graphics. In the end, they are marketing tools, giving agents perceived credibility in the eyes of the prospect.
Regardless company, be skeptical of anyone working on commission-based sales who provides this for “free.” Do not base your buying decision based solely on that information.
Term Life Insurance:
Primerica has a strong term life insurance product and they are a financially strong company. However, Primerica’s cost for a simple term life insurance policy is up to 29% more expensive than the industry average for the same product.
Based on information provided back in 2006, Primerica’s term life insurance policy was one of the only policies at the time that didn’t have policy exclusions for “war or acts of war/terrorism” deaths and they were one of the few companies that paid out all their claims for victims of 9/11. However, it appears there has been a shift in overall customer sentiment and an increase in regulatory complaints by customers to the National Association of Insurance Commissioners, the insurance regulatory body.
Most concerns customers voice center on the service and claims aspect of Primerica’s life insurance product. However, the marketing and sales process draws complaints as well. These complaints explain why Primerica customers are taking to the internet to air out their issues with the company.
Another issue customers cite is Primerica’s lack of online quotes. This prevents the customer from comparing quotes for coverage with other companies offering the same product. To get a quote, the customer must meet with a Primerica agent before being able to consider which policy to buy.
While the term life insurance product is a good product, the pricing, support, and claims payout tend to make up most of the dark cloud surrounding Primerica’s reputation.
Click here to run a quote for affordable term life insurance and accurate premiums before talking to a Primerica agent. Doing this first will allow you all the necessary information before you make a decision on which policy to purchase.
Primerica’s investment sales division (PFS Investments Inc., doing business as Primerica Advisors) operates everything related to investment and annuities. In this setup, Primerica holds nothing proprietary and is simply a broker for larger mutual funds and insurance companies.
The quality of mutual funds offered is similar to what you can get anywhere else. They represent big names in the field like American Funds, Fidelity, and OppenheimerFunds. There is nothing overly distinguishing about this side of the Primerica business that sets it apart from other competitors offering the same products.
Auto & Homeowners Insurance
Primerica’s property & casualty insurance department (aka auto and homeowners insurance), called Primerica Secure, is a referral service to Answer Financial, operating as a lead generation tool. Primerica agents get a small cut from this Answer Financial business. Answer Financial is an Allstate subsidiary.
Long Term Care Insurance
Less popular than it once was, Primerica still brokers long term care insurance for Genworth Financial. While not the largest moneymaker, it provides Primerica agents an additional product, backed by a financially strong insurance company, to sell prospects.
It is important to note that long term care policies are extremely expensive and become more expensive if you wish to have the benefits increase with inflation. Also, these policies have premiums that are not level, or where the price is not locked, allowing for the premium to increase as time goes on.
Long Term Care riders to life insurance policies have become popular for those seeking some level of LTC coverage. However, we recommend reviewing companies like American National and Phoenix Life that have strong living benefits options that come standard. This option helps save you money by utilizing accelerated benefits that come attached to the policy when purchased.
Primerica has also teamed up with Equifax providing an online tool that helps analyze your debt and provide strategies to help pay it down. Focused on debt stacking, this program builds a plan using your Equifax credit report, helping you quickly pay down debt.
Online reports currently show that this service costs $14.95 per month and mimics other existing services. For example, Credit Karma offers a credit report monitoring service and Mint (the sister product of Quickbooks) offers credit monitoring, money management, and advisory software.
Both solutions are free.
Primerica Legal Protection Program (LegalShield)
Primerica offers LegalShield’s, formerly Pre-Paid Legal Services, main product to their customer’s as well. LegalShield offers basic level legal services as a monthly subscription and a discount for attorney’s inside their network. This affiliation is one of the oldest partnerships inside Primerica’s menu of products and is fairly popular.
While there are large amounts of controversy concerning LegalShield’s methods of doing business, these services remain popular with some dedicated sales agents and customers.
ID Theft Defense
Another product offered by the aforementioned LegalShield company, ID Theft Defense is a product similar in nature to LifeLock or one of the countless identity monitoring services out there. In some cases, banks have been offering this type of service to their clients for free or at reduced rates.
What If You Have A Health Condition?
Primerica’s underwriting standard is not favorable to those with less than perfect health. This means that those who are looking for life insurance but have a medical history of cancer, diabetes, or depression will not get the best rate on their life insurance coverage. Customer’s who aren’t educated on life insurance with conditions like these may have their applications denied.
If they deny an application, seeking a policy elsewhere with another company is difficult. Primerica agents receive training on this and can potentially harm customers’ ability to obtain life insurance in the future.
It is always recommended to discuss life insurance with an independent life insurance agent that works with many companies. Each company has its own underwriting requirements and independent agents know which is best suited for any situation.
Is Primerica A Scam?
While their methods are unconventional and may be considered unprofessional by others in the insurance world, Primerica is not a scam.
Is it a “pyramid scheme?”
Yes. Primerica is the Amway or LuLaRoe of financial services, but that doesn’t mean it’s a scam.
Primerica is a publicly traded company and has been in the life insurance industry for over 40 years which makes them a well-established member in the life insurance community.