This company is often the topic of heated debate, which has left many wondering if Primerica is just a giant scam. You may have been approached by a family member, friend or even by a stranger in the supermarket about this opportunity and are left wondering if it’s a legitimate option.
A bit of background…
Whatever your feelings may be, the fact remains that Primerica is a real company, one that has been around since 1977 and still growing. It even was rated one of the 50 most trusted financial companies by Forbes in 2015. In 2012, the company paid out 1 BILLION in death claims, and 92% of claims were paid within 2 weeks.
Buy term and invest the difference
Buy term and invest the difference is their famous slogan. They say they are a “Main Street Company for Main Street North America” with a mission to target and help middle class working families choose the right financial services for their needs, and to help them invest in a smarter future.
Term life insurance is what Primerica is most well known for selling. It’s a bit different than whole life insurance, in that the policy is only good for a certain period of time and only pays out in the event the policyholder dies during the insurance coverage dates.
It’s really a just in case coverage that works much like car, health or homeowners insurance. You pay a monthly payment to cover expenses just in case there is a death, but you aren’t paid out any type of money once the policy is over.
The benefit of this type of insurance is that it’s more affordable than whole life insurance, and may be a better option for some people. Hence, “buy term and invest the difference” – you can pay less for a term insurance policy while investing more money into mutual funds for retirement.
The company also sells additional services like home and auto insurance, mutual funds and even debt solutions.
What is the Primerica Business Opportunity?
So, you might be wondering at this point why you might be hearing the term scam associated with this company.
The reason has to do with how Primerica operates on the MLM (multi-level-marketing) model. Which in and of itself doesn’t automatically make it bad, but it does raise concerns.
Here is how their business opportunity works:
Primerica agents are independent contractors, not employees. The company does not pay you a salary or benefits to promote their services – you are responsible for selling and recruiting in order to earn an income.
As a representative for the company, you earn income from commissions (25% at this level) on insurance policies, mutual funds, and any other services offered to new clients. This is just a normal commission based sales model.
However, you also have the ability to earn more money by recruiting new members into their sales force.
Recruiting – this is where the MLM model comes into play, because you can also earn an income by selling the opportunity of becoming a Primerica sales rep to others. Not only that, but you can go on to build a downline, where you recruit people, who recruit others, who go on to recruit others, and so on. You receive commissions for all the sales within your downline.
Now, in doing some research on Primerica, I have seen countless times people claiming their sales force only gets commissions on sales, not recruits. I have seen this arguement so many times, but it is completely false.
These are some passages taken directly from Primerica’s company overview:
There are different levels Primerica’s independent contractors can achieve, and each increasing level allows for higher commissions and bonuses. Each level increase is associated with recruiting more members. There’s also the override compensation which is paid through several levels, and is a bonus given to the recruiter when their recruits make sales.
For example, at the Representative level all an agent has to do is get licensed and they can recieve 25% commissions on sales.
However, the next level up, Senior Representative, they can receive 35% commissons plus bonuses if they meet certain criteria, including recruiting 3 new agents to the Associate position (which just means the recruits have to fill out an application and obtain a solution number, not necessary get licensed).
As a District Leader, they can earn 50% commissions and bonuses if they meet additional criteria including having one of their recruited Associates work their way up to a Senior Representative.
This continues up several levels until the National/Senior Sales Director, which they earn 95% commissions on sales plus bonuses.
Again, each higher level is partly acheived by their recruits achieving higher levels as well. This means the focus on recruiting is big as the compensation is so high.
Now, not ALL agents choose to recruit new agents as part of their business model, and some chose to focus solely on selling their services to clients. However, it can’t be denied that the company structure is designed in such a way to not only encourage, but pressure people into recruiting new members.
The misleading sales approach and aggressive recruiting
Now, because of the way their company structure is set up, there are a few red flags you should be aware of with Primerica. The company likes to tell people to sell to a warm market first, because they feel it may be easier and more comfortable for new agents to sell to people they know than total strangers.
However there are a few issues with that approach. First, it is going to create tension within your group of friends and family. Second, sooner or later you’re going to run out of those people to sell to.
Therefore, the way in which many sales agents try and sales force members is shady and questionable at best. One common strategy is to search job boards for resumes, and call up unsuspecting folks who think they’re being contacted about a real job, and bringing them in for an “interview”.
Another way is cold calling and telling people they have been referred by a friend or employer to the position, and asking them in for an interview. They may get these people’s numbers from warm market lists that were given to them at recruitment seminars.
If you do come in for an interview, what actually happens is you get thrown into one of these recruitment seminars. They pitch you on the dream of making tons of money, and tell you that it’s easy to do if you just work hard. People are asked to give up lists of their family and friends, their warm market, which is likely where these agents get their numbers for their next round of “interview” phone calls.
There have even been reports of the seminar leaders literally locking people in the room so they can’t leave before it’s over, although I can’t substantiate the claims.
Many complaints on Consumer Affairs tell of extremely offended, aggresive and pushy sales leaders at these seminars if you show any hesitation or disinterest.
There are also fees associated with starting out in this business which people aren’t always fully aware of.
Start up fees:
$99 licensing fee + $29 monthly fee for Primerica Online software
How much money can you make?
It is pretty much an impossible question to answer. Some people are making absolutely nothing while others are bringing in millions.
Here are some statistics…
The average income of their sales agents was $6,030 – Keep in mind this includes the very top earners as well as those on the very bottom, so some are making far more and others less.
Primerica also reported an average of 0.19 policies sold per agent, per month. That’s just over 2 (2.28, to be exact) policies sold on average per year by each sales agent.
That seems like an extremely small number. But, I know statistics never tell the whole story and can often times be meaningless or misleading.
The industry median pay for insurance sales was $48,200 per year, $23.17 per hour.
Source: US Bureau of Labor Statistics
The industry of insurance sales is a relatively decent paying one, and for most people, they’re going to be much better off joining a company that will actually hire them as an employee.
People may be able to make way more than the median income of insurance sales as Primerica Agents, however, I think the statistics show it is at best extremely difficult to do so.
Primerica’s products are a HARD sell
Face to face selling is extremely hard, and that is the strategy you must take as a sales agent for this company. It takes a certain type of personality to be able to not only approach others, but to convince them to buy what you are selling them.
It is particularly difficult for something like life insurance because it is such a big decision on behalf of the individual and their family. Not to mention, many people already have insurance policies set up and convincing them Primerica is the better option may be extremely hard.
Another thing to note, people usually can find these services and policies for cheaper at other companies than they can through Primerica. Part of the problem with MLM companies is they often times have to make their products more expensive in order to compensate for their sales model.
And being able to convince others to be a Primerica sales agent is another battle entirely.
Unless you are an excellent salesperson, you’re going to struggle with this business.
Final Conclusion – Would I recommend it?
Becoming a Primerica rep may appear on the surface to provide you with a sense of freedom, and the opportunity to make way more than you could selling insurance for another company as an employee. However, unless you are confident it is the right line of work for you, I would be hesistant to recommend it.
So is Primerica a scam? Well, no. But it is important to understand it isn’t easy and takes a lot of hard work, and you really do have to be a great salesperson. I don’t agree with their agents questionable recruitment strategies, like contacting unsuspecting people for interviews only to have them discover it is nothing of the sort, or, telling people it is easy to get rich with some hard work when in reality it takes more than that.
If you’re interested in the idea of becoming a Primerica agent because you want to start your own business, but you don’t think it is the right fit for you – check out my recommendation here. There’s no downline building, no face to face selling, and most importantly you get to sell what you actually want to sell to other people.