Primerica: All it claims to be? [closed]

Question

I've recently been contacted and had a conversation with a Primerica representative. Their claims of having the absolute best life insurance and getting above average returns on investments sounded too good to be true, which of course made me instantly suspect of Primerica.

Considering I know next to nothing about finances, I don't know how to verify or contradict their claim. A google search is less than helpful. While there does appear to be a good deal of disagreement over Primerica, most of the negativity is towards working for them, not buying a product from them. So my question is simply:

Does Primerica really have the best insurance and receive high returns on investments as they claim?

Answer 1

Primerica's primary value proposition is that switching from whole or universal life to term life, and investing the difference is a good idea for most people. However, there are a number of other important factors to consider when purchasing life insurance, and I would also be wary of anyone claiming that one product will be the "best" for you under all circumstances.

Best Insurance?

Without getting into a much larger discussion on how to pick insurance companies or products, here are a few things that concern me about Primerica:

1. They have a "captive" sales force, meaning their agents sell only Primerica products. This means that they are not shopping around for the best deal for you. Given how much prices on term life have changed in recent years, I would highly recommend taking the time to get alternate quotes online or from an independent broker who will shop around for you.

2. Their staff are primarily part-time employees. I am not saying they are incompetent or don't care, just that you are more likely to be working with someone for whom insurance is not their primary line of work.

3. If you have substantial reason to believe that you may someday need whole life, their products may not suit you well. Primerica does not offer whole life as far as I am aware, which also means that you cannot convert your term life policy through them to whole life should you need to do so. For example, if you experience an accident, are disabled, or have a significant change in your health status in the future and do not have access to a group life policy, you may be unable to renew your individual policy.

Above Average Returns?

I am also highly skeptical about this claim. The only possible context in which I could find this valid would be if they mean that your returns on average will be better if you invest in the stock market directly as compared to the returns you would get from the "cash value" portion of a life insurance product such as universal life, as those types of products generally have very high fees. Can you clarify if this is the claim that was made, or if they are promising returns above those of the general stock market?

If it is the latter, run! Only a handful of superstar investors (think Warren Buffet, Peter Lynch, and Bill Gross) have ever consistently outperformed the stock market as a whole, and typically only for a limited period of time.

In either case, I would have the same concerns here as stated in reasons #1 and #2 above. Even more so than with insurance, if you need investment advice, I'd recommend working with someone who is fully dedicated to that type of work, such as a fee-only financial planner (http://www.napfa.org/ is a good place to find one). Once you know how you want to invest, I would again recommend shopping around for a reputable but inexpensive broker and compare their fees with Primerica's.

Kudos on having a healthy level of skepticism and listening to your gut. Also, remember that if you are not interested in their offer, you don't have to prove them wrong - you can simply say "no thank you."

Best of luck!

Answer 2

Probably not, though there are a few things to be said for understanding what you are doing here. Primerica acts as an independent financial services firm and thus has various partners that specialize in various financial instruments and thus there may exist other firms that Primerica doesn't use that could offer better products. Now, how much do you want to value your time as it could take more than a few months to go through every possible insurance firm and broker to see what rate you could get for the specific insurance you want. There is also the question of what constitutes best here. Is it paying the minimal premiums before getting a payout? That would be my interpretation though this requires some amazing guesswork to know when to start paying a policy to pay out so quickly that the insurance company takes a major loss on the policy.

Similarly, there are thousands of mutual funds out there and it is incredibly difficult to determine which ones would be best for your situation. How much risk do you want to take? How often do you plan to add to it? What kind of accounts are you using for these investments, e.g. IRAs or just regular taxable accounts? Do tax implications of the investments matter?

Thus, I'd likely want to suggest you consider this question: How much trust do you have that this company will work well for you in handling the duty of managing your investments and insurance needs? If you trust them, then buy what they suggest. If you don't, then buy somewhere else but be careful about what kind of price are you prepared to pay to find the mythical "best" as those usually only become clear in hindsight.

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When it comes to trusting a company in case, there are more than a few factors I'd likely use:

1. Questions - How well do they answer your questions or concerns from your perspective? Do you feel that these are being treated with respect or do you get the feeling they want to say, "What the heck are you thinking for asking that?" in a kind of conceited perspective.

2. Structure of meeting - Do you like to have an agenda and things all planned out or are you more of the spontaneous, "We'll figure it out" kind of person? This is about how well do they know you and set things up to suit you well.

3. Tone of talk - Do you feel valued in having these conversations and working through various exercises with the representative? This is kind of like 1 though it would include requests they have for you.

4. Employee turnover - How long has this person been with Primerica? Do they generally lose people frequently? Are you OK with your file being passed around like a hot potato? Not that it necessarily will but just consider the possibility here.

Reputation can be a factor though I'd not really use it much as some people can find those bad apples that aren't there anymore and so it isn't an issue now. In some ways you are interviewing them as much as they are interviewing you. There are more than a few companies that want to get a piece of what you'll invest, buy, and use when it comes to financial products so it may be a good idea to shop around a little.

Answer 3

I was a Primerica representative, left to be on my own, and then returned.

Insurance is one matter that depends on the individual. Some do not need it. For example, when I was an independent agent with an independent marketing organization (IMO) (oh yes! multi-level is everywhere, dont kid yourself) I had an upline as well. We were pushed to sell final expense [burial insurance]. As an ethical agent, I believe this is a bad business practice. Primerica does not sell unneeded insurance to old people.

How can you justify selling the elderly, insurance to cover them for $10,000, at almost 100 to 150 a month?

I told my elderly potential clients, after seeing they live on a tight budget, that they were better off purchasing a cremation policy or funeral package than burial insurances as it would save them money in the long run.

Primerica is right in saying they are the only ones out there catering to the Working Class and Middle-America.

Where else can you start an Individual Retirement Account (IRA) with $25 a month? Nowhere!

All the other insurance producers want more money. They don't want to spend their time with what they call "losers". I love showing Poor people how the Rich get richer. Poor people should know the truth.