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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?

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"Best" is a very subjective measure –  littleadv Jan 29 '13 at 16:57
    
While your question is important, this is too localized. A better way to ask might be "what are the key points I need to evaluate when shopping for life insurance?". We don't know what your situation is, what your insurable need is, or what types of products fit you. I'd bet we can write up some good advice on how to shop, and what to look for so you can cut through the salesmen double talk. Could you rephrase your question? –  MrChrister Jan 29 '13 at 17:43
    
@MrChrister Can you clarify your objection a little bit? Looking back on the question, I agree that it needs improving, I'm just searching the best way to do so. My question really is about Primerica itself. I can't seem to locate a single verifiable source as to the legitimacy or danger of Primerica. –  karategeek6 Jan 30 '13 at 3:10
    
Well, doing research into a specific company is shopping, which we have determined is off topic for this site. It is very important, but ultimately the Internet shouldn't be making these choices for you. Maybe we can suggest how to evaluate. You can use that info to intelligently shop the market to find what suits you best. Might be Primerica, might not. So think about your situation in a broader scope, not one company. Something about the salesperson doesn't sit right with you; so tell us what you know, and ask what you aren't clear on. Ask so that it can apply to any company. –  MrChrister Jan 30 '13 at 5:12
    
Also, if the answers below spark new questions, great! Ask them as new questions. –  MrChrister Jan 30 '13 at 5:12
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3 Answers

up vote 9 down vote accepted

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!

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Thanks for the link to napfa.com. It looks like a very valuable resource. –  karategeek6 Jan 30 '13 at 12:59
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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.


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.

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i was with primerica as a representative, left to be on my own, came back.

insurance is one matter that depends on the individual, some do not need it, for example, when i was an independent agent with an imo, oh yes everywhere is multilevel dont kid yourself i had an upline as well, we where pushed to sell final expense.

as an ethical agent i believe this to be worse than anything people have to say about primerica. we dont sell insurance to old people.

how can you justify selling some old person insurance to cover them for $10,000 at almost 100 to 150 a month.

i told my potential clients who where refered to me, after seeing they live in a tight budget, they where better of purchasing a cremation policy or funeral package it be cheaper in the long run.

to the financial end.

primerica is right in saying they are the only ones out therecatering to working class and middle america.

where else can you start an ira with $25 a month. no where

all the other outfits want more money they dont want to spend their time with what they call loosers. i love showing poor people how the rich get richer. poor people should know the thruth.

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