Living the good life–before primerica
I let Primerica into my home. I gave Primerica my trust. This is how Primerica responded.
In July of 2005, a Primerica rep sat at my kitchen table. I didn’t know it then, but this was the beginning of a very interesting and challenging journey–for both of us.
It all started when the phone rang one evening:
“Hello, Mr. Wondra. My name is Rob Larson and I represent Primerica Financial Services.”
“Who?”
“Rob Larson, sir.”
“No. What company?” I’m not known for my phone etiquette–especially on cold calls.
“Primerica. We’re a financial services company. If there were a way for me to save you money by lowering your monthly payments, would you be interested?”
Now, he had no way of knowing, but at that time, I felt like we were in a financial crisis. Looking back, this may not have been true. We were paying our bills on time. Our credit score was very good. We were in no danger of losing our home. But I felt like our debt was eating us alive. Almost weekly, we juggled credit cards, balance transfers, bank accounts and what my teacher’s salary provided.
I’m telling you it was icky.
We we met our basic needs: bought groceries, payed the mortgage, the utilities, the taxes, got most of our clothes from garage sales and Goodwill (still do).
Every morning Lisa got up at 4:30 to deliver papers before coming home to help Emma and I off to school. The rest of the day she stayed home with our 2-year-old, did any sewing that she had from people, and built our Shaklee business.
Every night I went to my second job.
So if a mortgage company like Primerica were looking for someone to take advantage of with some big promises, we were definitely in a vulnerable position.
Primerica and the kitchen table
I wasn’t optimistic.
I tracked economic indicators like the GDP, prime rate, energy prices . . . Lisa and I are both college graduates, professionals—as best I can figure, we’re not stupid—and we’re not easily scammed.
We’d already used equity in our home to consolidate debt and refinance our mortgage at a lower interest rate once. And at less than 6% I was very happy with it. I understood the amortization tables. I understood equity, compound interest, and the tax benefits of lumping debt into a mortgage (as compared to paying credit card companies).
I watched the mortgage rates at our bank and its competitors, and I kept track of other economic indicators like GDP, the prime rate, energy prices, and was keenly interested in what the Fed was up to. Lisa and I are both college graduates, professionals—as best I can figure, we’re not stupid—and we’re not easily scammed.
Did I really want Primerica anywhere near my mortgage?
Yet if you know me, you also know I pride myself on keeping an open mind.
So we had him over.
The most interesting thing about that first visit was that he didn’t try to sell us anything. Basically all he did was introduce himself and Primerica as a branch of Citigroup whose mission it was to help people get out of debt and strengthen their financial situation. Then he drilled us for information. He was pleasant but efficient. He didn’t make any pitches. He didn’t tell any jokes. He didn’t brag about his company. And he promised nothing.
All he did was ask for information.
Since we were uncomfortable and already paying keen attention to our cash flow at the time, we had most everything he wanted at our fingertips—all the monthly payments and interest rates, time remaining on these debts, other bills, savings, etc. . . Some of it we had to dig for—like retirement savings and stuff like that.
The first meeting might have taken an hour.
You can’t keep consolidating and refinancing just to keep payments low. You may give yourself some breathing room, but you’ll never get to the reality of your debt.
What he promised to do with all this information was create a free report that outlined our entire financial picture. He called it a Financial Needs Analysis (or FNA) and said we could keep it whether we did business with him or not. His manner was professional. There was no pressure or expectation of any kind. Other than the report, I didn’t get the impression that he even thought he could help us. I think he had to wait for the report himself.
I appreciated that he seemed to understand family finances can be somewhat complex.
I made it clear I wasn’t interested in increasing the term of our mortgage. He knew the rate we had, and even if he could match or beat it, I really didn’t want to refinance again. Every time you do that, it costs you. Even if you go from 18 years to a 20-year term. You can’t keep consolidating and refinancing debt just to keep payments low. You may give yourself some breathing room (for the moment), but you’ll never get to the reality of your debt.
And you’ll never get out from under it.
Anyway, like I said, Rob wasn’t making any promises. And I was interested in this “report”.
Primerica’s Financial Needs Analysis (or FNA in Primeri-speak)
The most interesting thing for me was the analysis of our cash flow. It showed that our debt to income ratio was 34%. That is, for every dollar we made, $0.34 was going to pay our debts. The report said that 21%-35% debt to income was “Fair” as compared to:
- “Excellent” 15% or less,
- “Safe” 16%-20%,
- “High” 36%-50%, or
- “Dangerous” 51% or more.
More specifically the report stated, “Based on your current income, your debt is at a fair level. But you may be finding a sizable portion of your income going towards paying off debt. Consequently, you may not have enough to reach your other goals.”
Tell me about it.
Primerica’s debt elimination strategy: the s.m.a.r.t loan
Rob then took us through a few options that he thought would help—starting with a debt elimination program aimed at systematically eliminating the highest interest debts first and then moving on down the line. As a number cruncher, I had fun looking at the charts and tables, the strategy was nothing new.
I wasn’t impressed.
Next, he showed us an option involving our equity, consolidating debts, and refinancing with Primerica. He called it the S.M.A.R.T. Loan, and it caught my attention for 4 reasons.
- It involved simple interest,
- Included a bi-weekly payment plan,
- Let us keep the same number of years remaining on our current mortgage. In other words, at that time, we had 18 years left on our mortgage. Rob said we could run the numbers and stay with an 18-year term. And,
- We could do all this and decrease our monthly payments!
Primerica: scam or savior? My findings.
I was so excited about the potential for the S.M.A.R.T loan, I told him I’d have to think about it.
The last thing I want to do with my money is trust someone trying to sell me something.
I had to do my own research.
The last thing I want to do with my money is trust someone trying to sell me something.
I didn’t understand simple interest—and quite frankly, the more research I did, the more confused I got. I did understand how bi-weekly payments accelerate debt elimination. But I got confused when simple interest was involved.
As much as I respected Rob’s approach, I still didn’t trust him– or Primerica for that matter. Like I said, I had to do my own research.
So I scoured the internet, the library, called the Better Business Bureau, talked to our bank, called references, ran dozens of amortization tables, went back and forth with Rob asking him specific questions and making him do a fair bit of research. He didn’t know everything—and to his credit, he never pretended too.
He didn’t know everything, but to his credit, he never pretended too.
But he always called me back when he had the answer.
And I continued to pour over dozens of scenarios involving our own financial numbers.
Bottom line? It took me 6 months to be comfortable enough to pull the trigger. By that time, I’m sure Rob had long forgotten about me and was surprised when I called him back for another visit. A couple weeks later, we signed on the dotted line and haven’t looked back.
Primerica’s S.m.a.r.t. loan: a quick analysis after two years experience
That was two years ago now. How time flies. And I’m happy to report that (hallelujah) Primerica hasn’t screwed us over. Everything with our mortgage is going according to plan.
Interestingly enough, Rob gave us another call late this September. He was wondering if he could come out and run another FNA–just to see how things were going. So we had him out again. I’m happy to report that our debt to income ratio has dropped to 27%. Hopefully we can keep it going.
This visit we looked at our retirement savings and life insurance policies. Here’s what was most refreshing with Rob’s visit this time. He looked at the performance of our many and scattered mutual funds, and instead of trying to convince us to transfer them to Primerica, he said he recommended we leave them alone. They are all performing at a pretty high rate of return (and have been for some time).
He didn’t think his funds could beat them–and he was honest about that.
But he still wants to sell us Life Insurance. That was in October. I’m researching it. Maybe I’ll have it figured out by April or May.
Stay tuned until then for another report.
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108 responses so far ↓
1 Sam Sizer // Nov 25, 2007 at 3:44 am
Wow, that was a great read! Very interesting. I’m not going to pretend to know a ton about debt and everything as just a simple teenager but my mom can be quite frustrated about it and I’ve seen a few guys always knocking on our door or sending us letters about debt. Glad to see it is working out for you. I just hope this blog is helping you with the cash flow a little :), oh by the way, sorry for being such an idiot in class sometimes, haha.
2 Personal Finance Money Tips - December 15, 2007 | KCLau's Money Tips // Dec 14, 2007 at 10:02 pm
[…] Wondra presents Refinancing with Primerica: A Consumer Report posted at Chris Wondra . com, saying, “As a financial services company, Primerica seems to be […]
3 Jack // Dec 18, 2007 at 12:45 pm
I’m a Primerica agent and that is really a great blog, our whole philosophy is to do 100% what is right for the clients taking into account their whole financial picture. We don’t do any advertising thus our reputation is everything.
Why don’t you join Primerica has your agent ask you yet? Middle income people are dieing under debt and lack of retirement savings and Primerica needs all the help we can get since we’re one of the few financial institutions which actually try to help clients in positive way. As you’ve noticed the work is really all about educating people and gathering some data for the FNA which any body can learn to do. My background is software engineer and if you ask your Primerica agent what he’s background is it will most likely be something non financial also.
It seems your already working 2nd and 3rd jobs and once you see how much money vs time invested you can make here I think you would rather do this in your own time at your own pace and help people in the same time. So give your agent a “positive” surprise and call him up and ask him about attending one of our business overview seminars.
One good trick and if your thinking about getting insurance is to join Primerica, get licensed and then you can write your own insurance policy so that you can earn the commisions on it.
Good luck.
Jack,
Thanks for the visit and the comment. So far I’ve had a positive experience with the product and process that is Primerica. And then you have to push it.
I really do appreciate your visit and especially your taking the time to comment. But with all due respect, why did you have to launch in to a recruiting schpeel?
Of course Rob tried to recruit me. But that’s not what I wanted this article to be about–at all. Doesn’t Primerica have enough trouble managing its image as a pyramid scam without agents like you constantly launching into recruiting mode every chance they get?
Can’t we just have a conversation about the product? That’s what the whole thing’s built on right? If the products stand on their own, people will want to share them. I just did a bit of sharing above. Isn’t that enough? Do you really have to recruit ALL of your customers? Do you really WANT to?
I think the problem with MLM isn’t the multi leveled structure. It’s the thought that you need more than quality products to be successful. What if you just shared the education and the products? What is the big push to recruit, recruit, recruit?
I think the success of MLM companies (and their field) lies first in offering unique and valuable products and services. If you have great products and leadership, the rest will take care of itself. So instead of recruting EVERYBODY, why don’t you narrow it down to people who would be good at it. Not everybody is competent at extracting information for an FNA. Not everybody is a good educator. These are unique skills. That’s why MLM has so much turnover. It’s not for EVERYBODY.
So do your best to show people why you have the best products in your industry. Service the heck out of your clients. Show them what it takes to be successful. Then simply let people’s experience guide them. If (after the experience) they don’t have the confidence to evangelize–then there’s nothing special about your product, your service, or your opportunity.
But if they do . . .why then you may just have something.
But don’t tell me you don’t have to work for it. That’s one thing I saw right away when dealing with Rob. This is a guy that works his butt off. Success in any field requires that you work hard. To imply otherwise makes you look like you’re running a scam.
Primerica is not a scam–until you tell people it’s easy to make a lot of money. Once you do that, you’ve set your footings in beach sand.
Thanks for your comment Jack, and giving me the opportunity to rant a bit.
Chris
4 Jessica O'Grady // Dec 19, 2007 at 5:52 pm
Dear Chris,
I am also a Primerica Rep, and I’m very pleased that you had such a wonderful experience with our company. Our products are highly competitive, and always in the client’s best interest, and I hope you and your family will achieve financial independence.
I think most people get the wrong idea about our company and the recruiting aspect involved. I hope you don’t mind if I try to explain our reasoning. Every company recruits; Pepsi, Microsoft…even schools will actively seek better teachers or coaches. As to the high turn-over… if you look at any entry level position there is about 80-90% turn-over in the first year, those numbers hold across any industry, in any field. There are several reasons why we offer the business opportunity to our clients; most of them need additional income to achieve the goals they have for their family (college education, retirement, and so on). But the main reason we offer the opportunity is we need help, this company is built on correcting a wrong done to America families. That’s why Art Williams started the company in the 70’s. Financial services companies are ripping people off every day; mortgage companies that offer ARM’s and “pick-a-payment” loans, investment firms that won’t talk to you unless you have $250,000 or more to invest (I don’t know anyone with that kind of money), and Insurance companies that push Whole Life policies that are too little insurance coverage for too much money.
Also I (personally) NEVER tell people that what I do is “easy”…we have to bust our butts to do what we do…but there is a simple business model to follow. People have different personalities, and different reasons for getting involved with us. Some people really like the idea that by working with us they will have a complete financial education, and that they can give concrete diagnostic tools (the FNA)to show others the way to financial independence to others. Some people like the security of knowing they are in control of their income (having to ask for a raise= no control ). Some people like the freedom of setting their own hours and knowing if they work hard for five to 10 years they never have to work again. And then you have people who want to make a difference in the world; if you can save one family from financial ruin, or stop one case of old age poverty, then your time was well spent.
We don’t use gimmicks or pitches (you saw that) we just show the difference between what the client has and what they tell us they want. I don’t believe that only special people can succeed at our business. You do have to have a good work ethic and the ability to focus on your goals (why you are working). And worse case if you spend 90 days with us you will know more then 80% of the people out there about how money works.
It sounds like you have a lot a credibility (anyone who does that much research would have a highly valued opinion) and I hope you will use that to help Rob to build his business by continuing to give him names and phone numbers of other people that he can help. I hope I didn’t run on too long.
Best Wishes,
Jessica
Jessica,
Thank you for that very intelligent and well thought out comment. I’ll agree with you (sort of) that everybody is recruiting. But I stand by my belief that successful organizations are not recruting EVERYBODY, but looking only for the best–or if not the best, then at least the competent.
In Primerica’s (and all MLM’s) defense this is often difficult to do when each distributor or member is independent and free to run that part of their business any way they choose. I think it’s one of those complex educational issues.
Thanks again for your thoughts Jessica.
Chris
5 RMC // Dec 19, 2007 at 9:23 pm
Very interesting. Product lines - is it possible to do the right thing for a client 100% of the time if a representative has only one insurance product to sell, only one mortgage product, one VA and one LTCi? I’m wondering if a rep found a better product than the one endorsed by the company, then would they tell their client to purchase the better product even if they couldn’t earn a commission? Read Primerica’s basic agreement Item #7.
RMC,
Good point, but I don’t think it’s entirely valid somehow. Shame on you if you sell a customer something that makes their life worse–and you know it. For example if Rob would have sold me a mortgage that he knew was worse than the one I already had, or convinced me to switch into a lower yielding Mutual fund.
But if it’s a product that the consumer doesn’t have yet AND it makes the persons situation better. I have no problem with that–regardless of other options or products that the customer could choose from.
It’s not the salesman’s job to do your research and tell you all of the options on the market. Is that what you’d expect when you walk onto a car lot? A furniture store? A realtor’s office? Of course not.
This “I have no responsibility” attitude bugs the hell out of me. Sales people want to sell you stuff–their stuff. You gotta know that.
Chris
6 Mike // Dec 20, 2007 at 11:37 am
Hi Chris,
I read your blog and was very fascinated to find your story very much like my own. My wife, kids and I all live on my educator salary and are in decent shape, but money is always tight and we are definitely too high in our debt to income ratio.
Just recently I got a call from a friend with Primerica and we have done the whole financial work-up. I now have those numbers and am looking over the same type of refinance that you entered into. Three things have me a little cautious. 1) The rate is about 2.5 % higher than my current rate, 2) the closing costs are pretty high (about $5,500) and 3) I am not sure yet whether the loan is for two payments a month or a payment every two weeks, with the difference being one extra monthly payment. I am working on my excel sheet now to check how my current mortgage would fair if I upped my principal payments by 1/12 each time.
Did you sort through any of these same questions? Would love to know what you found out. Thanks for the great blog and taking the time to share. - Mike
Mike,
Hell yes I had to sort through those questions–each and every one of them. That’s one of the reasons it took me so long to go with Primerica. But when it was all said and done, I knew for sure that it was the best option.
So that’s the good news. The bad news is that I can’t, with any confidence, say that this is the best thing for you and your family. Here’s why:
As I remember it, the closing cost sounds a little higher than I remember mine being.
Your debt. You have to run the numbers yourself for your situation, taking into account the interest on all of your debt–not just the mortgage. If you have a good mortgage rate, and you think you can tackle your other debt with other strategies, man go for it. Don’t mess with it.
My situation was such that it was getting to the point where I was loosing confidence in our ability to pay down our debts outside of our mortgage. The interest rates were higher on those, and because we did so much juggling, sometimes we’d miss a payment (sometimes we didn’t have the cash and sometimes we just forgot it was due) and then you’ve got additional penalties on top of that. Stuff like that adds up over time.
Home equity lines of credit were available at our bank. But I didn’t like the interest rates or the closing costs on those. I could have refinanced at our bank, but that would have increased our term, which also increased the total cost. I could have left my mortgage alone and went bi-weekly, but that wouldn’t have addressed all the debt (and cost of interest) outside the mortgage.
The SMART loan allowed us to lump it all together, write off the interest on the credit card debt, write off the closing cost on the mortgage, keep the term of our mortgage THE SAME (this was huge for me), AND reduce our total monthly payments on debt. Plus they take the payment right out of the bank when I get paid every other week. So that’s one less transfer or check to write, which might sound like a small thing, but when you were used to juggling so many payments, like we were, it was nice.
But that’s my story–not yours.
You have to run the amortization tables yourself. Look at the total cost of your debts over time. And look at your other options, not only with other lenders–but also with yourself. One big option often overlooked by folks doing this is your ability to increase your income to speed things up. That should always be your first option to eliminating debt.
At any rate, hope this helped a bit. Thanks for stopping by and leaving your thoughts.
Chris
7 Justin // Jan 7, 2008 at 12:44 am
Chris,
Thanks for the read. It’s nice to hear from someone who did their homework on a product instead of railing against it as a scam. I actually found your page while researching Primerica.
You’re welcome. Glad you found it helpful.
Chris
8 jill // Jan 7, 2008 at 8:25 pm
Hi Chris, you story was very well written and the beginning was much like ours. Unfortunately for us, our situation changed shortly after we signed our SMART loan deal and we were pregnant with #3 … the plan is great if you can stick with it. Unfortunately for us, we not only added up another 20k in debt, but are kicking ourselves for jumping from an overall 6% rate on our mortgage/debt to 8%. We were told over and over that interest rate doesn’t matter, but it does when you are trying to come up with the extra income to make the payment. I caution that this deal is certainly not for everyone. Our rep was a family “friend” who has never brought up the subject again after getting us to buy the SMART and the LIFE Insurance (twice as high as what we ended up switching to after we woke up to our mess). Just be cautious and shop around on the Insurance end — lot’s of increasing #’s in the fine print. We still feel the sting of this burn after 3 years … we are looking to get out of the SMART and back to a better interest rate, but job situation and income have changed, so it is a challenge. Hindsight is always 20/20, but if I can help somebody else, please know that I would have never done this as I look back. Ahhh well, we will perservere. Happy New Year and thanks for reading! Jill
Thanks for your input Jill,
I’m sorry to hear that it’s not working out for you. Obviously, not knowing all the details, I don’t understand your situation or how you ended up paying more per month on your debt than previously.
That was the BIG issue for us. We were drowning in our monthly debt payments–which included lots of credit card stuff on top of a car payment and the mortgage. After our consolidation, we were actually paying $250 a month LESS than everything combined before the SMART loan. That, on top of the fact that now all the interest we pay is tax deductible, AND even with the increased the mortgage debt we were able to keep the payoff date the same. That was huge for me. The best of all worlds. And believe me, I looked at as many other options and scenarios as I could think of.
But everyone’s situation IS different, and I totally agree the SMART loan is NOT for everyone. If I didn’t have all that credit card debt, I probably wouldn’t have gone for it.
Thanks again for your visit and input.
Chris
9 tom // Jan 15, 2008 at 8:04 pm
Hi Chris-
I am researching Primerica and came across your page here. Your story has reassured me that this might not be a scam…after just a quick google search turned up many negative results!! We just refinanced about two yr ago into a 30 yr fixed @6.5…not bad…but have accrued about 30k in cc debt. We are also discouraged by the home equity lines of credit because of the rate, and we don’t qualify for quite as much as we need. We still are unsure of the intrest, and how it is calculated. So many of those negative blogs mentioned that the interest is calculated no dif than any othe bi-weekly plan on the market. Our current mgt is offering a bi-weekly plan to cut our mgt to 23 instead of 28, but without adding any of the debt, and with the smart loan we can add all of the 30k in, and still pay off in 21 yrs. Sounds like a great deal….almost too good to be true!!! Can you help me understand how the interest is calculated? Thank you
Hi Tom,
Sorry. I can’t help you to understand a bi-weekly simple interest program. I barely understand it myself.
(”Dammit Jim!) I’m and English Teacher, not a mathematician (or a mortgage salesman). (Sorry, I just couldn’t resist the Star Trek reference)
And to be quite honest with you, I’m NOT all that positive that the SIMPLE interest part of the plan is in fact saving me (or anybody) all that much money. For me it was the combination of a number of factors that made the SMART loan work for me.
I’ve read time and time again, when you compare apples to apples–a traditional bi-weekly mortgage to a simple interest bi-weekly–that there isn’t much difference in outcome. I’m sure that your bank will allow you to begin paying bi-weekly on the mortgage you currently have. If you can get rid of your credit card debt without a refinance, this is by far the best option.
Do you have that option? I didn’t think we did. Apples to apples is great, but in all honesty traditional banks aren’t as flexible when it comes to dealing with mortgages. My bank should have had us set up on a bi-weekly plan. I would have jumped on that if it had been offered. Was it? No. So that’s one for Primerica in my book. Did a mortgage consultant from my bank ever come out to my house and sit at my kitchen table to discuss some options to tackling my debt? No. That’s another one for Primerica. Did my bank look at my different types of debt along with my interest and lay out a program that allowed me to reduce my monthly payments, write off interest, and reduce the number of years on my mortgage? Never in a million years.
Primerica showed me that there are options out there for us normal working stiffs. It’s the combination of all the strategies (debt consolidation, simple interest, bi-weekly payments, direct deposit, etc . . .) that makes the SMART loan smart. Maybe you can find or create this type of combination where you already bank. I couldn’t.
It’s my belief that the SMART loan is not the best option for everyone. Quite frankly, I wish it hadn’t been the best option for me. That would have meant I should have been able eliminate the debts outside my mortgage. But sadly I was struggling to do that. That fact made Primerica’s SMART loan the best option for me and my family.
Hope this helped Tom. Do your homework. Don’t jump too quickly. Ask lots of questions as well. It looks like with the Fed’s concerns about the economy today, interest rates (including home equity lines of credit) will probably begin to drop even more (which may complicate your decision by increasing the number of variables you have to include in your simulations).
Best of luck to you Tom. Let me know how everything works out.
Chris
10 Jack // Jan 24, 2008 at 8:18 pm
Hi Chris,
Thanks for taking the time to write your story. I easily identified with your story. I tend to be leery of opinions that come from people who appear to be too happy, or too angry. You provided a balanced demeanor, which is highly uncommon when you Google “Primerica”.
Right now I am going through the same motions you did, under very similar circumstances. I’ve seen a few comments regarding not understanding the simple interest so I thought I’d add an item to your page that was told to us by our Primerica Rep.
We were told that almost all mortgage companies run their interest schedule out a year in advance. The claim was that based on your next twelve scheduled payments the other companies have already calculated and fixed the amount of interest you are going to pay for those payments, regardless of what payments you actually make. I don’t know if this is supposed to be a Jan thru Dec thing, or literally the next twelve months, or whatever, but it was the explanation they used to back up how they can help me pay off my loan in 18 or so years instead of 30 when other companies can’t.
The long and short of the pitch was Primerica re-calculates your principle every 14 days, which lowers your principal every 14 days, and in turn lowers the interest owed on the next payment. Everyone else calculates your next years worth of interest and then applies “extra payments” ONCE at the END of the year.
Again, this was what we were told, I have no idea if it is true…yet.
One more note. I know most people probably noticed this already, but just in case you didn’t. If you started making monthly payments to a conventional 30 year loan on Jan 1 of 2008, you would have made 360 payments by Dec 31 of 2037. With Primerica you make 26 “half payments” per year, or 13 payments. You would make the same 360 payments about 2.25 years quicker just by making bi-weekly payments instead of semi-monthly, without even considering interest advantages. If you truly run the loan (at 7%) and make a full extra payment every 12th month, the loan pays off at the end of the 24th year. At 6% it’s a few months longer.
Again, thanks for the story, it was a good read.
Hi Jack,
I totally hear you on the “too happy” or “too angry” phenomena. It’s so hard to get a grasp on things when too much emotion seeps in.
Thanks for the comment and the additional info on how simple interest works. I think you explained it very well. When I made my decision I took interest considerations (rates, simple vs traditional) out of the equation, and looked at two things only:
TOTAL INTEREST paid for the term of the loan, or the cost (the shorter the term the lower the cost), and
TOTAL MONTHLY PAYMENTS, or how much could I afford to throw at this debt per month.
I think the reason why there is so much negative or misinformation about the SMART loan is two-fold:
1) The simple interest concept applied to a mortgage is new and different, so it’s difficult for people to understand it. And,
2) While it sounds great, I’m not convinced that it works better than a bi-weekly payment program on a traditional mortgage for everyone.
I think it works like this:
Bi-weekly payments save you (a percentage of) money in interest when compared to traditional monthly payments.
Simple interest monthly payments might save you a little money when compared to traditional interest monthly payments.
Then add the two.
Bi-weekly simple interest payments save you (a percentage of) money in interest when compared to a traditional bi-weekly payment plans–though I’m not sure that amount is very significant.
I honestly think that there are so many things people are trying to compare at the same time that it’s easy to get confused–so they gravitate to a relatively easy concept to understand like “interest rate.”
I think the SMART loan was great for us because we’re fairly long term in our approach. If you think you’re going to sell your house or reorganize your debt or finances significantly again withing 3-5 years–stay away from the SMART loan. If you already have a traditional mortgage with a fair interest rate, but your currently paying once a month, just leave it alone and switch to bi-weekly payments with that lender. If you have debt outside your mortgage that you’d like to eliminate, and you think you can do that within the next couple of years without consolidating–do that.
If however, you have debt to consolidate outside your mortgage that is oppressive and you can decrease your total monthly payments on debt, while at the same time keep the term of your mortgage the same or better with the SMART loan–I think it is definitely worth looking into.
Thanks again Jack.
Chris
11 Mike Morris // Jan 29, 2008 at 12:09 am
love the blog and I love what I do with Primerica,
One thing that you didnt mention about the SMART loan is that we do second looks; that is every other year or so depending on LTV loan to vaul and debt ratio we can often save you even more money heres how; if LVT is lower and credit score is good we can often lower the rate even more. Many people we help have lower credit scores because of debt and after thier money was free up to work for them it gets much better also homes go up in vaule. I will give you a real example of one of my clients loan was 85% LTV credit score mid 600’s got then out of a very bad product paid off all consumer debt and freed over a $1,000 a month now the best part because of low credit score interest rate was 9% seven months later we did a second look and the rate droped to 7.2 saving another $140 a month we never charge fees for the money already loaned the processing fees were about $1200 total and they are still on track to pay off the 30 year loan in 19 years. THAT means that its time for you to call rob and have him do a second for you if he hasn’t already
thanks for the great blog and I would love to help more people so if you know anyone in the Portland/ Vancouver area give them my web page
thank you
Mike Morris
12 Wendi Nickel // Jan 30, 2008 at 5:05 pm
I am also a Primerica Rep and wanted to mention that the S.M.A.R.T. loan does not charge PMI that a traditional loan does. So that in itself could save a consumer $50.00 to $100.00 per month.
Regards
Wendi,
What is “PMI”?
Chris
13 Dru // Jan 31, 2008 at 1:54 pm
Chris,
I just want to put my 2 cents in…
You mentioned in a couple of your responses that Primerica is a MLM(Multi Level Marketing) organization. And most people, even reps believe that as well. Primerica is a MCB (Multi Commision Business). In order to be a MLM you have to be registered with your state as such. Primerica is NOT. We work just like real estate, you have agents and brokers. Same concept just applied to financial services. Primerica is NOT an MLM, not that there is anthing wrong with thoses companies, in my opinion with MLM’s you have to “buy alot and let it rot.” Reps in PFS have no inventory. It works the same way other banks do, you have loan officers, insurance agents, securities licensed reps, etc…the only difference is reps in PFS have the opprotunity to generate income off the production of other lisenced reps. We are highly regulated industry(SEC, State Board of Insurance, etc.) We have the opprotunity to Own a business, yes own it. After producting 1 Regional Vice President and generating 50k in personal income you have owner ship of your brokerage firm, you can sell it(7-10 what your business generates in income in one year), or you can pass it down to kids or family to own and operate. Name another bank that will allow you to do that? If there is one, i dont know about it.
To answer your last question from wendi. PMI is private mortgage insurance. But what I think wendi is talking about is escrow. Citi Corp Trust Bank does Not included escrow in theyre loans. Why pay a bank to write a check for your taxes each year? People with no escrow in theyre loans should set up a money market account and the money that is generate through out the year can go towards taxes via a personal acount vs having the bank control it. The reason is so that you can pay your taxes personally and keep the intrest that was generated in the account over the year. In most case banks will take your escrow each month and invest it in to the economy pay your taxes for you at the end of the year and keep the intrest generated. Its in the clients best intrest to keep what is rightfully theyre’s…
Dru,
Interesting distinction between MLM and MCB. Thanks for that. Though, with more and more successful network marketing and direct selling business models, I think your idea about keeping inventory is a bit out dated–for legit MLM models. Of course, I’m sure there are still some old school mlms out there that require you to keep inventory–but I’m getting off topic.
Thanks again, Dru.
Chris
14 Johann // Feb 4, 2008 at 3:52 pm
Gee, my professional PFS agent couldn’t even tell me how PMI or simple interest worked without having to call HQ for H E L P! Embarassing for him when I had to explain why.
If not a scam, then a sham, PITY.
15 Gina D. // Feb 5, 2008 at 11:13 pm
This is the best blog on Primerica I’ve found yet. I appreciate that the $MART loan is not for everybody - I just wish I could figure out if it is for us.
We bought our house nearly two years ago on an 80/20 loan (80 % main mortgage, 20% HELOC), b/c we didn’t have a down payment. We used the money from the sale of our old house a few months later to pay off credit cards and do some home repairs - a good decision, I believe. However, now the interest on the HELOC is drowning us, and we want to refinance.
Like you, Chris, I have been mulling payments, and terms, and rates over and over and over. But you just said something that strikes me as why this may not be for us - length of ownership. I doubt we’ll be in this house long enough to reap the benefits.
Right now the $MART loan, though more expensive than the conventional, doesn’t have PMI, therefore allowing a higher loan to value and a decent “cash-out” for more home projects. But do we want to pay that small sum over 30 years????
I’m wondering, if, in our case, it would make more sense to do the conventional mortgage plus a small HELOC. But the lure of simple interest, no PMI, and no forced escrow makes it seem worth it.
BTW - in a conventional mortgage, you only have to escrow if you have higher than 80% loan to value, otherwise you CAN opt out.
I feel like I probably know more about mortgages than most brokers at this point and my head is SPINNING! Good luck to everyone muddling through this decision
Beware the Primerica term insurance. It’s expensive - you can get cheaper term from other companies and pay extra for your disability waiver and child riders. Just be sure it’s a well qualified company.
Gina,
Interesting conundrum. Not knowing your situation, my feeling is that the SMART loan makes more sense if you’re looking at it as a long or medium term strategy to get out from under debt–not a short term fix. Are you also aware that SMART loan carries with it a hefty pre-payment penalty if you pay it off in 3 years or less? That’s something else to consider if you’re thinking of making a move in the next 3 years.
Thanks for stopping by and leaving your comments Gina. Best of luck to you!
Chris
16 Nick // Feb 8, 2008 at 2:32 pm
So, what’s the final answer….is Primerica a scam or not. I have a friend who is trying to lure me into joining the company, but I am very skeptical about the whole thing and the opportunity they offer sounds to good to be true. Don’t know what to do, can you help? Thanks
Nick,
Why would you want to do something you are feeling “lured” in to do. Skepticism is healthy. Why don’t you find something that you want to do? Something in which you can use your unique talents and abilities to add value to the world.
Never, under any circumstance, let anyone take advantage of you.
Find your own path. I am in no position to give you advice about your career.
I use one of Primerica’s products–the SMART loan–and I’m happy with it. Beyond that, I make no claims.
Chris
17 Melissa B. // Feb 11, 2008 at 2:42 pm
Chris, Gina, & Nick,
I can definitely appreciate all the research you did prior to accepting the SMART loan. Unfortunately, it seems that there are individuals suffering from “paralysis from analysis”. Chris, you wasted over six months of getting out of debt sooner.
My opinion is if you don’t make some type of drastic change now then the last five years of your life will be a repeat of the next five. Furthermore, people are in debt because they do not have enough money to get out of it.
As for Nick, were you born into the occupation that you are in now? Probably not. You had to learn it. You will not know if Primerica is right for you unless you try? You haven’t given yourself a chance because you haven’t even tried. You can start a business for $99.00. Think about it. Think about all of the materialistic things you own that you have spent that amount of money on. Are these things getting you ahead in life? Are they changing your financial future? My guess is no.
Chris has two jobs, which means he spends a lot of time away from his family. And for all of his hard work he will never own what he leaves his family for everyday.
18 Jonathan Hoag // Feb 12, 2008 at 12:39 am
Three Words: Independent (Agent/Broker) Needed
I was with PFS for 7.5 years and did only 4 $mart loans, one of which was mine at near 10% interest back in 2000 with a 3 year hard prepay 5/4/3% penalty. I left the loan on 3 years and 1 day for a 3/1 ARM at 4.625%. It is currently at 6% in the 5th year.
Check bankrate.com for competitive rates in your area.
I was sick of being captive and having such a limited product line that paid me poorly and was simply not competitive in today’s market. In other words I got tired of handling price objections from people who went on the internet to compare.
Term insurance rates have dropped once or twice per year with each carrier I rep and at PFS only once every other year and they are still high.
My income and referrals skyrocketed since I went with an independent firm. I have grown my agency into over 13 states now.
I liked Primerica’s concepts, I just got frustrated with the products that went with it. Too much control and limitation over me and what I could do for the customer. No health, disability, fixed indexed annuities, tax prep, etc. and limited product choices for clients.
My wife has not worked since 2004, about a year after I left for independence, and we have no debt except our house now.
Third party sites to validate the competition are:
bankrate.com
term4sale.com
insure.com
It pays to shop around.
Contact me if you want a personal explanation of what the real competition brings to the table at my email address provided.
19 Edgar Beltran // Feb 13, 2008 at 3:57 am
I have never found a blog so balanced like this one Chris, I agree with everything that you have to say, but at the same time I would like to add my 2 cents in. Just so you and everyone else who reads this blog are aware, you can opt out of the 3 year prepayment penalty, yes your interest rate would increase by a 1/4 %, but if you are going to save money monthly as you did and you have looked closely at your financial situation and come to the decision that this is a good program for your family at least on a short term basis, sometimes refinancing into the SMART loan really makes sense when opting out of the prepay penalty. I would like to throw in some other aspects of the SMART loan just to educate the public and that is this, if your loan is re-amortizing every 14 days because you are using the bi-weekly function, and along with that your interest is accruing daily, you have 2 positive aspects on this mortgage loan. Think about this, by your loan re-amortizing every 14 days you are being charged less interest than if your loan amortized every 30 days. Another good aspect is that we do not charge a start up fee to enroll in the bi-weekly program, most mortgage companies do, plus at the same time charge a fee every time you make a payment, we don’t. What most mortgage companies fail to explain as well is that if you make your biweekly payment, the middle payment is held till the beginning of the next month and than applied so is this program really helping you, well if it saves you money, it’s helping, but if you can save even more, isn’t that what you want to do.
20 Sgt. Homer // Feb 20, 2008 at 11:48 am
Pursuant to RMC’s comment your response is that his point is not entirely valid. The guy has a factual point and it is entirely valid from my perspective.
When he points out that a salesman for a specific company cannot be very objective when he or she has to work under a captive contractual enviroment.
Personally I do agree that if you are able to recognize the distinction between a salesman and a consultant then you acknowledge that a salesman has no responsibilty to research any other alternatives despite the fact there are better products out there outside of their domain.
If so why let a salesman handle something that requires so much responsiblity as a person’s finances?
So how can a salesman claim to do what’s right 100% of the time when they have no client allegiance beyond what their company allows?
What’s right for who?
Client or company?
Can a person dedicated to one company alone really be objective?
They say buy term and invest the difference but if you are captive what you are really saying is: Buy my term only and invest the difference in my products only.
So if your term is non guaranteed level past the first 20 years and expensive. I have to issue that one over another which is cheaper and fully guaranteed level for the entire duration of coverage?
Where is the 100% right thing there?
For instance I know that if I had a whole life policy and assuming I fit the buy term and invest the difference scenario I could save a lot of money by implementing that strategy.
However if I am dealing with a salesman, he is not going to be inclined to do the best possible job. Only the best he can do under his circumstances. Which are dictated by his company under his exclusivity contract.
Considering that those PFS policies are rather expensive on women in particular.
It seems to me that is somewhat contradictory to their philoshophy of saving money.
If I can save a person a lot of money in a deal such as a term policy purchase then that makes their savings for retirement much better.
I would never limit my finances to one company because no one company has the answer to all possible situations.
Is death the only thing that can disrupt income from a bread winner?
By the way the operating distinction between MLM and MLC is that MLM tends to favor the people above by giving the new agents very low commissions, encourage internal consumption sales, limitations on products, giving up agency legs, limiting territory with networking contracts etc…
For instance in a MLC business although an overwrite is paid in both MLC and MLM the MLC agent who produces the sale gets paid the largest portion as a producer while on MLM the producer has such a low contract that one or many of his uplines actually make more money on his sale than the agent does for himself.
I found the distinction between MLM and MLC to omit that very important fact. If I bring a piece of business to a company, should not I enjoy the reward of my work more than some VP who never sat there?
People accept what they are given when they don’t know any better.
I have looked at SMART and I find it to be a product that has a specific use. I find that if a homeowner intends to live out the entire life of the loan unchanged it may be a great tool.
I only wish they could issue attractive interest rates and stopped telling people that it doesn’t matter. If that was true then we would all issue 0% APR loans.
Why add PMI to loans when you are charging high rates that compensate for PMI and the property secures the loan anyway?
That’s like being happy about taking one less step a day.
I am sure as long as everyone in the club agrees exclusivity is a good thing, everyone loves this blog.
Of course why not?
It seems a lot of bloggers are part of the conglomerate and conform to that model. So obviously they will praise eachother, support eachother and probably be bothered by my point of view.
You like that stuff and that’s great I respect that but there are those out there who truly understand that you cannot call yourself competitive if you work under product dictation.
There is a higher level of responsibility for a client, there is a higher crusade if you will.
That is to represent a clients interest rather than a company’s.
To stop being a salesperson and becoming more.
This is a nice blog but it is somewhat naive. I read the best war ever in some other blog I found while searching for Primerica info.
It opened my eyes. I used the search words primerica and alex. Hope it helps you too.
Sgt. Homer
21 Chris // Feb 20, 2008 at 12:37 pm
FYI Citicorp Trust Bank’s mortgage interest calculation
((Principle * interest rate)/360 )* number of days since last payment
e.g.
100,000 loan at 6%
Monthly payment $599.55
Biweekly payment $299.28
1st payment - 100000* .06 = 6000
6000 /360 = 16.67
16.67*14days = $233.38 of interest owed leaving $65.90 applied to principle.
2nd payment - 99934.10*.06 = 5996.05
5996.05/360 = 16.65
16.65* 14days = 233.18 of interest owed leaving $66.10 applied to principle
That is $132 in principle payed off in 28 days as compared to a typical 30 year amortization which only pays off $99.50 in principle the first month. See bankrate.com for amortization schedule. The term “simple interest” is a bit overused by everyone. Many banks have started using this term to describe their mortgage but unless you get the actual calculation you have no idea what they are talking about. Another significant difference in their calculation is the immediate application of payments. A typical mortgage company will only apply payments one time a month. So while you are making two payments a month, it is only being applied once the second biweekly or “full” mortgage payment is received so no interest is actually saved. There are other things but I won’t get into it unless asked more specifically. I wanted to clear this point up for those that were wondering (even agents it seems). Nice blog Chris.
22 Mike R // Feb 28, 2008 at 8:51 am
Excellent blog, Chris.
I, like you, am a client… not a rep. I share a similar educational background to you, though I chose the IT Dept of a University up in Ontario.
I made the move to PFS (from London Life) back in Sept of 04, when I sat through the same FNA process that you did. I had a workout buddy who was doing well in the business, who asked if I would like a second opinion on my financial goals. With the promise of no pressure, I agreed.
My wife and I have been very careful with our debt, and outside of our mortgage, have one credit card (roughly $1700 balance). That’s it… no vehicle payments, no loans. So the SMART didn’t apply… the insurance and investments did, however.
At 35 (in 04), I was in a 20 pay whole life policy, $100,000 on me, $75,000 on the bride, and nothing on our children (3 at the time, now 4). This plan was choking $364 month out of my pocket. The worse part… no savings value for the first 8 years. How that doesn’t qualify as theft eludes me.
The FNA came back with different numbers… I required $400,000 to be properly insured, my bride needed $250000, and final expenses and some grieving time on my kids. Being tech-savvy, here’s what I did… I went to RBC’s website, found their life insurance calculator, and entered the numbers myself. RBC’s site suggested I needed $363,000. Now who’s closer, PFS or London Life?
Oh, and a 30-year term plan cost me $116/month. The remaining ~$250 goes directly into my funds, on top of my pension from work.
If I can maintain the plan until I retire at 57, I’ll have $750,000 on top of my pension. I’ll have no issue with the term policy expiring 8 years later.
As for investments, my situation is different from yours. My funds, thanks to my LL agent, were in Mackenzie funds. I have nothing against Mackenzie, but I swear he found their two worst funds and put my money in them. And left it that way since ‘93! I assume some of the blame… I trusted him to look out for my best interest, so I didn’t keep an eye on the accounts/balances. Lesson learned.
So, when I saw the opportunity to improve my holdings, I jumped, and am now the holder of Primerica seg funds, and Trimark and Fidelity mutual funds, that have done fantastic since ‘04.
Here’s my only issue with comments by RMC and Homer: their aim. Truth be told, they clearly have a vendetta against Primerica. The fact of the matter is that many companies in financial services are captive. State Farm, The Cooperators, London Life, RBC Insurance… they all sell “their” insurance. I don’t see RMC and Homer blasting them. If it’s an improvement over what a client currently has (like that piece of crap LL policy I had), then the PFS agent has clearly done a standup job (thanks again, Rod). Could I have gotten the same term cheaper elsewhere? Perhaps. But here’s the key… I wasn’t looking. I thought London Life had my back! So my agent found me, and improved my situation. Nuff said.
When it comes to funds, Primerca can market them all. They are not captive to just their own funds. I speak from experience… I hold Trimark and Fidelity funds, thanks to my agent.
I think your blog is extremely well written, Chris, and I think it’s a shame that now it will become a battlefield.
Oh, and Chris, re: Citicorp Trust Bank’s mortgage interest calculation… very interesting. I hope every PFS rep made notes on those numbers.
Mike,
Thank you so much for that insightful and informative comment. We actually just did something similar going with a Primerica term life and dumping a confusing whole life plan with Ozark. We shopped around a bit to ensure that Primerica rates where competitive, and found that they were–very. Cheaper than most that we found for $250,000 of coverage for each my wife and myself. So we’re at a little under $80 a month for half a million in insurance plus a child rider.
I’m thankful for your comment after reading so much negative stuff about Primerica. I was extremely nervous about about going with this policy, but in the end figured we were getting needed protection (which we’ve been shopping for/putting off for a few years) in case one of us bites the dust. I figured, worse case, we could go with this policy until we can discover a policy that is strikingly better–as so many say exist.
Thanks again for your reassuring comment Mike. I really appreciate it.
Chris
23 Marti R. // Feb 28, 2008 at 7:11 pm
Well, Chris you scared me for a minute. As an ex-employee of Primerica home office. I truly believe in their strategies. I left employment back in 1998, to stay home with our youngest child. We had just bought our home. I didn’t know if we would be able to make ends meet without 2 incomes. Two years later, we started our own business. We are under 10 years of paying off our mortgage (originally a 30 year mortgage. We only have minimal credit card debt (business equipment)w/an interest free period to pay it off. I owe it partially to the strategies learned at Primerica, and wholly because the good Lord. It’s good too see that Primerica is doing good for our country
24 Mike Morris // Mar 1, 2008 at 2:46 pm
one other thing to think about when refinancing is the rule of 50/25
on a standard mortage at the end of 15 years you have paid about 70% to 75 % of the intrest that is charged. With a SMART loan you work with your rep to pay off your home at a time of your choosing ; not the banks ; so you can controll how much intrest you pay. So if your standard 30 year loan go’s 15 years you have paid 2/3 intrest to your bank if you need to refiance will that bank give you back the over paid intrest? of course not they dont have to. With a smart loan many clients have paid thier homes off in 10 ,15 20, years some pay off even sooner it is the home owner that controlls the pay off. As for the higher intrest rate we are s more competive now more than ever. So decide which is better by looking at both than choose what is best for your family
good luck
mike morris
Mike,
Please take what I’m about to say as constructive criticism.
You need to work on your writing skills. Your comment is so riddled with the most basic grammatical and spelling errors that I have a hard time taking you seriously–much less understanding what it is you’re trying to say. I’m sorry but it’s true.
Not to mention that you failed to explain the “50/25 rule–the other thing to think about when refinancing.”
How can we “think about it” when you didn’t explain it? What does the number 50 have to do with anything you wrote about above? What about 25? You did mention 75% once, and I could deduce that 100 minus 75 is 25. But that’s about as close as I can come to having the slightest clue about what you’re on about.
Chris
25 Michael // Mar 4, 2008 at 12:40 am
Hey Chris,
I came to this page after trying to research about the company Primerica. One of their representatives came to my family and I and talked to us in about the same matter as for you and your first meeting with one of their reps. Now I don’t know too much about what he was telling me, so naturally I was a bit suspicious. What he told me sounded too good to be true, that I could invest for 8 years and then stop and I would eventually have around 1.4 million (by investing in mutual funds). Now as good as this all sounds, and he even went into showing us numbers and how it works, I was still a bit suspicious. I want to invest my money so that when I am ready to retire I will have a nice lump of money, and I think I am the right age to start investing. The only thing is the 3% (roughly) I am earning from my bank is hardly worth the effort, and though I do gain from it, the gain is minimal. I am only 19 and don’t have enough experience, which makes me an easy target. I know you can’t exactly tell other people whether or not Primerica is a good choice for them to go with, because their situations might differ from yours and you only did research into your own situation, but I wonder what you or others might have to say on my situation. Now I know I didn’t give a whole lot of information, but I am just wondering if going with a company like this is a good investment for someone of my age. As far as I know, I have been told that it isn’t and that the best investment is something you control and own, like a house or land. I just want to gain some other unbiased opinions to help me make my choice. Good luck with your future Chris and I liked how with your review it was not totally emotionally biased, I can’t say that about many other customer reports.
Michael,
19 is a great age to start investing your money, and you are absolutely right–the 3% you are getting from your bank is NOT the way to go. And while buying property (or real estate) can be a wise investment if you have that kind of cash lying around, it isn’t for everybody. Owning your own house, while hugely beneficial for a wide variety of reasons, should NOT be looked at as an “investment.” A lot of people call your house an “asset”–it’s not.
Your Primerica agent is interested in selling you some mutual funds. Mutual funds are a great place start saving your money. I own a number of them myself (though not from Primerica), and it’s fun to watch them grow over time. In the most general way–I would recommend that you look into them and start investing on a monthly basis.
I don’t know much about Primerica’s mutual funds so I can’t say anything about them one way or another. All funds have fees and things, some more some less.
However, there is a lot to learn here and when it comes to investing, you have literally thousands of choices. Do a little research, learn what a mutual fund is and how it works. Learn how stocks and diversification works. Learn a bit about risk. Learn about some of your other options. Take some time. But then give yourself a deadline and commit to some sort of investment vehicle. You’ll thank yourself in 20 years. If you start now, and do it smartly, there’s no reason you shouldn’t be able to eventually end up with 2 million.
Thanks for stopping by Michael. Good luck to you.
Chris
26 Ian B. // Mar 4, 2008 at 10:00 am
The rule of 50/30
….”on an average loan of $150000,after 12.5 years,the homeowner has paid $179,000 in total payments,but only $39,177 has gone to principal.The homeowner has reduced the principal by less than 30% after 50% of the loan amortization perio.By the time the mortgage is paid off,the homeowner will have paid almost 2.5 time the original loan amount.”
very informative blog,
best regards,
Ian.
27 Janida // Mar 5, 2008 at 1:31 am
Hi Chris,
I just came across your blog and was astounded by all the great information it contained. As a PFS agent, one of the challenges our company faces is having to re-convince a consumer that our SMART product is a good product. Although I agree that it may not work for everyone, overall it is a great solution in helping restructure how a person is paying off their overall debt.
So many companies have advertised all these ridiculous loan products that appealed to giving buyers what they want but have not focused on what is right for their pockets and as a result, the country is now suffering and its ashame that so many people are losing their homes. I’m proud to say that PFS has not suffered instead, we are proudly helping many familes keep those homes.
Additionally, Citicorp has always used a traditional fixed rate loan and they do not sell their loans. It is always good to shop around, but ultimately you pay for what you get.
Mortgage companies have stayed in business for years by continuously refinancing loans and allowing their customers to remain in debt forever. It was a matter of time before the whole subprime devastation happened.
28 Michelle // Mar 9, 2008 at 8:56 pm
Chris,
I’ve enjoyed your website very much.
I recently sat through a presentation in my home and was impressed by the fact that PFS offered the free FNA and that they stressed helping people get out of debt and meet their financial goals. I have never wanted to sell ANYTHING in my life but I have always been a hard worker and was excited by the idea of being able to help people and make a good living doing it.
I’ve almost completed my classes to become licensed in Life insurance but learned a couple of things that made me doubt the integrity of the company. On further investigation, I found that some of what I’ve been told by the people that recruited me isn’t true. (Although the laws are pretty strict regarding honesty while selling insurance to a client, there aren’t the same restrictions on what recruits can be told.) My initial reaction was the desire to wash my hands of the whole thing and walk away (with a bad impression of the company itself.) On further reflection, I decided that the problem may just be the way that one office is being run. Before making a final decision, I would like to speak to someone locally in another PFS office to try and determine the truth.
I believe I live in the same area as you do, would you be willing to send me Rob Larson’s phone number or email address?
There was some discussion above about pre-payment penalties. It may be a fairly new consumer protection law in our state, but I was told by US Bank that only subprime mortgages are allowed to carry a prepayment penalty.
29 Dave // Mar 11, 2008 at 4:24 pm
I have $110, 000 in debt including credit cards, line of credits, etc. and $144,000 left on my mortgage which adds up to $254,000 and alot of stress.
My mortgage rate is 4.75% until 2012…
If anyone can explain to me in simple terms on what exactly Primerica could do to help me and my family get out from this burden of debt it would be very much appreciated.
Please email me at rock1@rogers.com with Primerica in the subject field.
Any help would be greatly appreciated.
Thank you,
David
30 STORMIN NORMAN // Mar 21, 2008 at 6:39 pm
I LOVE YOUR BLOG. I HAVE BEEN WITH PRIMERICA FOR ONLY SEVEN MONTHS AND ABSOLUTELY LOVE IT. MY FAVORITE THING TO DO WITH FAMILIES IS TO ASK QUESTIONS WHEN I AM WITH THEM BECAUSE WHEN I SAY SOMETHING, I AM JUST TALKING,,, BUT WHEN THEY SAY IT..IT IS TRUE….OTHER MORTGAGE COMPANIES SPEND AN OUTRAGEOUS AMOUNT OF MONEY ADVERTISING THE RATE….WHAT GOOD IS A CHEAPER RATE WHEN THEY ARE STILL ENDING UP BEING IN DEBT FOR THAT MANY YEARS.?….I AM VERY LUCKY TO BE IN THE GREATEST HEIRCHY IN PRIMERICA AND I DONT TAKE IT FOR GRANTED….BUT WE ALWAYS ASK OUR CLIENTS…..”IF WE CAN SHOW YOU HOW TO GET OUT OF DEBT SOONER AND SAVE YOU TONS OF MONEY, AND IT’S FREE TO FIND OUT,,,WOULD THERE BE ANY REASON WHY YOU WOULD NOT WANT TO EXPLORE THAT?” HOW MANY MORTGAGE COMPANIES OR BANKS ASK THEIR CLIENTS THAT…..? KEEP UP THE GOOD WORK…..STORMIN NORMAN…..ATLANTA…. …PLUS THIS IS SO MUCH BETTER THAN BEING SOMEONE ELSE’S SLAVE AT A J - O -B ……………
Stormin Norman,
You don’t need to shout.
Chris
31 Darlene // Mar 26, 2008 at 6:54 pm
Thanks for a great and thoughtful blog. We are also considering the smart loan and trying to decide if it makes sense. Is there a calculator online somewhere that will allow you to input numbers and calculate results? thanks.!
32 Angie // Mar 26, 2008 at 8:39 pm
I am thankful for your website and the work/research you have done. It is nice to hear someone discuss the good and not so good of Primerica. I join the millions of other Americans who are living paycheck to paycheck-I think the SMART loan will work great for us as well. However, we cannot get onboard due to our mortgage loan being less than a year old…we need to wait until October. So, until then, I will continue to investigate- and revisit this site! I am glad you pointed out that you dont have to use EVERY product of theirs and are still gain some freedom from debt. I cant wait to see what this blog says next time I visit!
33 Chris // Mar 27, 2008 at 6:40 am
Well, I came back to see what was happening on the blog here and I noticed a bunch of new comments. I wanted to just let it go but I couldn’t. STORMIN NORMAN, I’m glad you are excited and passionate about the opportunity you have found with Primerica, but random posts like that are what make Primerica seem like another one of those “deals” or “cults” and make it harder for us to build credibility. I’ll ask any other pfs rep out there reading this to STOP IT! Stick to the facts on any internet blog. There has been repeated posts thanking Chris and commenting on how unbiased and unemotional the blog has been. THAT is what people researching Primerica on the internet are looking for. They finally find it and you people have to come in and screw it up! I really wish Chris hadn’t approved that post, or Mike Morris for that matter.
For those that are looking for our help, we have over 5000 offices across the country. Chances are pretty good we have one in your area, and I highly recommend you seek one out. (I’ll resist the urge to promote myself here.) Everyone’s situation is different. A barber can’t give you a haircut over the phone. We have to see the whole picture to make a good recommendation. The power in what we do lies in the fact that we can make every area of your financial life work together in harmony towards a common goal. I wish you luck.
Thanks Chris
34 J.D. // Mar 30, 2008 at 8:12 pm
I have a S.M.A.R.T. loan for my mortgage (15 years left, bi-weekly) and I wanted to point out a couple of things for those people who are researching the product, since it isn’t for everyone.
Other mortgage brokers, as of today, can also offer this product. The only difference is that they don’t allow the bi-weekly payment program for free; normally they charge for it. However, some sub-prime clients approved for this loan will pay for the program internally b/c the interest rate will be higher than a non-Citi mortgage company who could also qualify them.
Just be VERY careful about one thing: if you miss a payment while you are in the bi-weekly program, it will mess up everything and Citi will even require you to pay every month with a money order or cashier’s check. I’ve seen it happen to one of my reps. This loan is a great product but it is not designed for people who have a tendency to be late or slow with their bill payments. Keep in mind that Citi rarely has the same vision and goals that Primerica has!
As far as the simple interest part, it works out to be a few months savings over “scheduled interest” on a 30 year mortgage that is paid bi-weekly. However, for some people that can translate into thousands of dollars.
For those individuals who are looking for an actual verifiable history of Primerica, go to http://www.healthcareplanners.net/primerica_history.htm . It looks like the website is from a PFS rep because it includes some training material, but it does a great job of explaining where exactly Primerica came from.
Thanks for the great blog Chris! It’s nice to see a website that looks objectively at Primerica, without giving too much credibility to those people on either end of the poles.
Keep up the good work!
J.D.
35 D. G. // Apr 1, 2008 at 1:11 am
Hi there. Some of you may find this link helpful. It breaks down the information on schedule interest vs. simple interest so you can see what the savings will be over time. I’d just like to say that I used to be a Primerica Rep and plan on reinstating my licenses now that it’s no longer a conflict of interest with my older job. Here is the link and thanks for all the great reading.
http://finance1o1.blogspot.com/2007/06/simple-interest-vs-schedule-interest.html
36 Brandon // Apr 4, 2008 at 9:50 pm
All,
I am thrilled to hear all the stories that have been posted. I am a District Manager with Primerica at the age of 24. What this company does for families is truely amazing. I have been able to help families in our debt solution program and it has turned there whole life around. My mother has a neg am loan and we are trying to save her from it, so it is hitting hard at home right now what mortgage companies are doing to people. For anybody that reads this, I want you to know that this company is more than just great products we are about helping people reach their goals and dreams that they have given up on because of how society has treated them. For my fellow Primerican’s; remember we have it good, lets make a difference in someones life everyday. People need us during these hard times! God bless.
37 A Different Chris // Apr 5, 2008 at 7:44 pm
To the original Chris,
I have absolutely no affiliation with Primerica. I simply found this site while accidently comming accross Primerica’s website. It looked interesting and I decided to click a few more buttons on my trusty old mouse and low and behold, here’s where I ended up for about 45 minutes. Yeah, perhaps I need a little more excitement in my Saturday nights. Oh well, it’s my life and I like it.
Anyhow, great blog and wonderful research. Chris, you’ve got a gift…although you claim not to be a salesman, you’ve sold me…
38 Neil // Apr 7, 2008 at 3:55 pm
MTG Professor: Great Mortgage Information.
http://www.mtgprofessor.com/table_of_contents1.htm
39 Steve // Apr 7, 2008 at 6:26 pm
Chris,
I have to be honest I have not read all the comments but I did read all of your story. My wife and I are both Primerica reps and we love what we do. I just wated to comment on the interest becasue over and over again I see it being called simple interest. Primerica does deal with simple interest but please remember it is simple interest recalculated daily. It’s the cheapest way to borrow money. Anyway, hope that helps! I’m glad your happy with the service you are receiving.
40 trademark registration // Apr 7, 2008 at 7:13 pm
LOL @ “A Different Chris”: “Perhaps I need a little more excitement in my Saturday nights. Oh well, it’s my life and I like it.” I almost fell out of my chair. Good line. =)
41 Adam Simon // Apr 8, 2008 at 11:30 am
Chris,
This is a long message, but I promise you that if you read all the way through that you will be absolutely sure, either way, if Primerica is right for you as a client or for business. Please pay close attention to the story about my family member.
This is my first time writing on this blog, but it isn’t my first visit. I want to say thank you, first of all, to Chris for having this “resource” for anyone and everyone who is here to do research about Primerica. Please read with an open mind and an open heart because it seems there are a lot of emotions and defenses put up when the Primerica opportunity is challenged. I’m not here to “convince” you either way if being in business with Primerica is right for you. I’m here to tell you my story and the rest is up to you to do your investigative due diligence.
A friend whom I respect greatly and still do introduced me to Primerica. He invited me to a meeting and I had to admit that I was a little skeptical about the focus on recruiting. I told him that I’ve tried a few MLM companies in the past and, although they were reputable, neither my wife nor myself were interested in another recruiting frenzy. What I wanted, with all of my heart, was to be a business owner where I was truly independent and that my production and promotion within the company would only be limited to the number of hours in a day. That aside, I do believe in the power of leverage and realize that even McDonald’s recruits, hires and trains people to grow them into a billion dollar machine. I’m not denying that. For me, though, I wanted an opportunity that would really allow me the freedom to “decide” to hire and train others instead of felling like a failure if I don’t build a team as fast as possible without having the proper focus and training on the products that my team is supposed to be proficient at selling. As far as I’m concerned, what I was being told was that I could have a team of 100, who had very limited knowledge about products and services, go out into the marketplace and offer those same services! What I was truly looking for is my own business where I could hire and train 10 people (or 100!) to have actual depth and skill in those same products and services so that they will be able to last in an industry where referrals are the lifeline of our business.
I said all that to say that, after joining Primerica, I heard 95% about recruiting and building (which I agree with the concept, by the way) and 5% about the services I was to offer 10 minutes after the meeting across the kitchen table from a client. That ratio wasn’t adding up to make me successful. RED FLAG number one.
Regardless, I was excited about this industry and I passed my life license exam in 13 days. While studying to get licensed, people would ask me what I was doing and I would let them know that I’m beginning my business in the financial services industry starting with Life Insurance. I was pretty floored when my “warm market” started telling me to come see them once I was licensed. That drove me even more to succeed because I realized that there was a true need for what we, as professionals, do.
I’ll never forget my first appointment. It was a family member and his wife. I wasn’t licensed yet and my trainer came with me and did an excellent presentation. Because he was buying “me” more than the product, my family member and his wife agreed to purchase insurance. After my trainer left, my family member told me that he was excited to give me the commission and also because they truly did need the insurance. He was disappointed when I told him that, because I wasn’t licensed, my trainer would get the commission. RED FLAG number two. They needed life insurance and that was the bottom line. I was told to come back and get the sale when I had my license so that I would make the money, not him.
One night I couldn’t shake the questions in my mind of “Did I make the right choice in Primerica? Did I research other companies like it before I signed on? Did I “jump” in too quick?” So that’s when I began my research and came upon this blog. Again, thank you Chris for allowing all of the comments, positive or negative.
For anyone looking into the Primerica “opportunity”, here is a list of the rest of my RED FLAGS from my experience. Again, this is not a “recruiting ploy”. This is the truth from my own experience. Do what you want with it, but please at least face the issues and be absolutely willing to change. It may just change your life. It did for me. I also encourage those looking into Primerica for their product (not “products”) to investigate these same questions.
1. Have you researched the Primerica contract to really find out that you have signed a NON-COMPETE clause, meaning that you can’t take your client’s or your team if you leave Primerica?
2. How many life insurance companies can Primerica quote for your clients? And to add to that, how do you know that they are getting the best deal for them? If they ask you if you’ve researched all of the options, what will you say? You will have to say that Primerica products, not multiple carriers, are all that you can offer. (By the way, I re-quoted my family member with my new company after leaving Primerica and his policy is $40/month cheaper with better benefits.) This is a man who just bought a home, has a newborn and a wife. Do you think he can use and extra $40/month?
3. How many variable annuity products do you offer? Again, can you offer multiple? (”No” is the answer.)
4. Can you offer disability insurance, Key Person Insurance, or Executive Bonus Plans for Business Owners? (No.)
5. Can you offer Fee-Based Investments on the securities side and not just have a 6/63 license? What about a Series 65 license or a Series 7? (No.)
6. When you get to RVP, are you going to be able to quit your full time career or job and possibly lose health benefits or pensions? And are you going to be able to give up your strongest leg of your business? Your contract, signed in your name, requires this.
All of these questions were questions that I had to answer myself. I know how it feels to doubt. You owe it to yourself to investigate. If you do and you find that you’ve made the right choice for you, I wish you all the success on your way to RVP. If you have come to the place where I was, please feel free to contact me at asimon126@yahoo.com to discuss possible other options. There is a way out and there are other companies. Please don’t be fooled. Will mine be the one for you? Maybe not. But can you lay your head on your pillow at night knowing that all of your clients who love and trust you as their professional advisor are counting on you to have already faced these questions with the absolute assurance that the products and services they are trusting you for are the 100% best for them? Thank you for your time and for making it through this message.
Adam
42 FVP // Apr 16, 2008 at 3:27 pm
I came across this page by accident was reading your How to keep IRS away from your paycheck, got defensive when my eye caught Primerica Scam ?
I use to be an RVP 15 yrs ago under Mike Sharpe im mentioning his name to let the other Primerica Reps know what i’m talking about, maybe you already found out about the company since you say it took you 6 months, if you would have gone to one of the meetings, it would’ve been spelled out.
As I said, I was an RVP 15 yrs ago and much has changed. More Products. Theres nothing wrong with MLM as it was stated in others replies. Here’s Primerica’s history:
Arthur L. Williams Jr.started A.L.Williams & Associates then merged with MILICO ( Mass. Indemnity & Life Insurance Co. ) from there Primerica to Citigroup somewhere I remember American Can Co.
Chris you’re in good hands with the associate wanting to sell you ” as you say ” it’s not selling. If you do not have Life insurance you do need it to take care of your loved one.
An acquaintance who called himself a so called friend sold me Life insurance, yep he was with Prudential Life. He sold me on the idea of getting a life insurance policy because it had a great investment, a Whole Life plan. Long story short I was ripped off for 5 yrs.
Chris, give the Rob Larson the opportunity to explain the Term Life policy. if you do have a Whole Life or Universal Life policy or any Life insurance policy that combines your savings, investments with the insurance you’re being ripped off. If you do not have any Life insurance then yes I understand why you feel that Rob is trying to sell you a Life insurance policy.
Primerica is a great opportunity for those who are trying to start a bussiness without the risk of opening one. I read Adams letter to to about Red Flags. His mentioning the Non-Compete Clause is a sorry attempt to discredit Primerica. Primerica is not for everyone but if you would know what Mike Shapre makes in just bonuses alone, then Yes Adam you could quit your job as an RVP.
p.s. when I left Primerica
Mike Sharpe in just bonuses were $750,000 a month. in your face Adam
Great Blog !
FVP
Felipe Villarreal Perez
43 Adam Simon // Apr 16, 2008 at 10:05 pm
Chris,
I apoligize for posting twice on your site, but wanted to respond to Felipe’s post. I also want to say that I realize that what you are doing here is not intended to be a “fight” of opinions. So that is what I won’t do. In response to Felipe…in my face indeed, my friend. My first comment is that my intention is not to make a “sorry attempt to discredit Primerica”, or even to try to discredit Primerica at all for that matter. The contract speaks for itself and, in my case, I jumped in without reading every single detail of what I was signing. I wrote from my own experience to try to guide others who may be researching this to examine all of the facts before jumping right in like I did. It’s about being completely informed. I also noticed that you didn’t deny the Non-Compete clause. The fact is that it can’t be denied because it’s actually in there. That is what I want readers to know. If they are okay with that, then I wish their business all the success in the world. Notice in my post that I never say that you can’t make $750,000/month. I’m absolutely sure it’s possible. And I also agree that Primerica can be a great opportunity for “someone trying to start a business without opening one”. I would not be so naive to believe that it’s the only way, either. My point is that regardless if you make $7.50/month or $750,000/month, you must do your due diligence as a business owner to know for certain that the business you start is really your business. In my case, I wanted true ownership of my team and my clients from day one. I also wanted to be truly independent and able to contract with whatever carrier I choose. On top of that, I did not want anyone telling me that I “had” to give up my full time job. I need the freedom to make a major decision like that by myself, thank you. Especially when it involves a decision that greatly affects my wife and children. To me, Felipe, true independence and ownership, at its core, will allow me the freedom to choose the course that I will take my family on. After doing my research, I felt that the Primerica contract, in the end, was telling me that they have chosen for me already and that they will keep my clients and my team if I ever choose to leave. Again, they allow me to choose, but dictate the outcome. I’m sorry that you took my post as a personal attack to the company. I will not apologize though, for trying to help others like myself who are trying to sort this whole issue out by sharing my experience. Primerica was not for me. It may be for you. You have the freedom to choose that. Please let others who read this do the same. Thanks again, Chris for the blog.
Adam
44 K. H. // Apr 25, 2008 at 5:50 pm
Chris,
After reading your stroy and the following comments, I set up a spread sheet to compare the difference between a traditional 30 year mortgage and the bi-weekly simple interest loan and thought the results were worth sharing.
Your assumption that the simple interest portion of the loan may not provide much in the way of interest savings appears correct. In fact, any saving at all may come down to whether the loan uses 365 days/year vs. 360 day/year to calculate the interest.
For example, a traditioanl $100,000 30 year loan @ 6.1% the monthly payment would be $605.99 and of course be paid off in 30 years for a toatal payemnt of approx. $221,186 (not including origination costs, PMI, or escrow).
The same loan ($100,000 @ 6.1 %) paid on a simple interest bi-weekly payment of $303 (1/2 of $605.99) and a 365 day/year interest calculation would be paid off in approx. 633 payments for a total cost of $191,799. And while this is a significant savings, it seems that most of is is a result of the bi-weekly payment resulting in 26 payments each year or the equivalent of one extra payment to the principle each year.
Lets assume that someone who can afford to make an extra payment each year (26 half payments instead of 12 ‘regular’ payments) by making bi-weekly payments, could also afford to make that “extra payment” by adding 1/12th of a payment or $50.49 to their traditional monthly payment making a total monthly payment of $656.49 ($605.99 divided by 12 plus the regular $605.99). This results in the loan being paid off in apporx. 293.59 payments for a total cost of about $192,740.
The difference is a saving of $941 for the simple interest bi-weekly loan if it is based on a 365 day/year interest. However, if the loan uses a 360 day/year to calculate the interest as illustrated in the example in response #21, it will take nearly 645 bi-weekly payments for a cost of about $195,333 or about $2,593 more than the traditional loan with an extra 1/12th payment each month.
Of course everyone’s situation is different, and other than what was discussed here, I don’t know what features, or terms the SMART loan has. But if all things are equal (interest rate, origination costs, scheduled payments, etc.), the simple interest bi-weekly loan calculated on a 365 day/year does provide a small advantage. However, if the rates are higher, or if it is calculated on a 360 day/year, it may not be all that ’smart’ after all.
45 ian.b // Apr 28, 2008 at 7:53 am
for adam simon…
….”"He was disappointed when I told him that, because I wasn’t licensed, my trainer would get the commission. RED FLAG number two. They needed life insurance and that was the bottom line. I was told to come back and get the sale when I had my license so that I would make the money, not him. “……
Who did all the work on this appt,adam?
Yourself or the trainer?
Shouldn’t he be compensated for his time and expertise?
What you fail to mention is that you are still learning the business and even when you are licensed that does not make you an expert …hence your field trainer taking you out in the field to give you hands on experience.
46 Larry // Apr 29, 2008 at 11:02 am
ian.b,
What YOU fail to realize is the hardest part about making a sell is SETTING the appt and using the recruit’s CREDIBILTY. How hard is it to take data, put it in Call Atlanta, Run a quote, and print?
The Recruit deserves the bulk of the sale.
47 Larry // Apr 29, 2008 at 11:04 am
KH,
The rate is ALWAYS higher in a SMART loan.
48 Jody // Apr 30, 2008 at 12:50 pm
The post from Adam Simon had me laughing. “Red Flags” he mentioned consisted of his own personal opinion of “flaws” or his lack of research when signing contracts, etc.
For starters, Primerica might not have as many products as the next big giant, but it has great products. It doesn’t, nor has it ever, claimed to have more than the next guy when it comes to variety.
Secondly, just because YOU don’t think something is good, doesn’t mean it should be red flagged. To each his own. We are all in our own different situations.
Furthermore, as everyone else stated when writing in this blog, thanks to the owner for being so fair and pointing out all the points he thought were good and bad. Most of the responses have been fair enough.
Primerica isn’t for everyone - whether you are looking for the services or becoming an agent. That is probably one of the only things that can be disputed here.
One thing that we must remember is that these are independent shops - independently run by people who should be experienced and ethical.
Those of you who had (factually proven) bad experiences probably have come across an office that had shoddy practices or lacked in training their staff, etc. Those of us who are “good eggs” are taking this seriously and learning as much as we can. We attend training regularly and strive to do the best we can for our customers. We LOVE to help families out by offering our products and services and getting them on the right track to financial independence.
There are those who believe in doing better in their own lives and for the lives of others. I happen to be one of them. IF there were ever a time that I thought my (Primerica’s) services and the opportunity I offer to people were a scam, I’d stop doing it right away.
For those of you who can’t step outside of your own little safe world, that’s fine. No one is forcing you to do that. I, however, took it upon myself to step out of mine to offer a great opportunity to myself and my clients.
Moral of ANY story - OPEN YOUR MIND, and for goodness sake - READ THE FINE PRINT!!! You will then realize that you have no one to blame but yourself when the situation you’re in doesn’t exactly turn out to be what you expected.
Primerica’s services aren’t for everyone. The same goes for the business opportunity, however, it is very doable if you just give it a chance and not listen to nay-sayers.
Thanks for the chance to give my two cents!
49 K. H. // May 1, 2008 at 10:13 am
Larry,
If the interest rate is higher on a SMART loan, then it is difficult to see how it is a benefit to the consumer.
By my calculations, at even just 1/10th of a percent higher rate the smart loan looses any appeal.
Again, I am assuming that anyone who can afford to make 26 bi-weekly payments a year could also add 1/12th of a payment to their normal montly payment.
Also, do you know if the SMART loan is calculated using a 360 day/year, or a 365 day/year?
50 Steve // May 4, 2008 at 10:15 am
I was approached by a friend to use Primerica as my mortgauge. My interest rate now is 9.45% and owe 29 years, making monthly payments of $1,172.00 . I have no other debt. Primerica is offering me the same payment at 8.75 % . Cutting the payment in half and paying every 2 weeks said my loan would be paid off in 20 years 10 months. Is the SMART loan for me?
Thanks again for all the info