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Since I wrote about my experience as a Primerica Customer awhile back, that post has become one of my most popular. But as a publisher, the most satisfying thing for me is the discussion it has generated.

There are a lot of intelligent people taking part in a very respectful way. I think that’s relatively unique when compared to the overall discussion being had on the web about Primerica.

The article I wrote was specifically about my experience with the SMART loan, and much of the discussion has been true to that topic. However, I also get a fair number of comments and emails about other aspects of the Primerica experience.

The following is an example of the types of emails I will get from time to time:

My name is Megan… and I live in Iowa. I am considering joining Primerica, as I just attended a meeting last night, and am interested in helping people get out of debt, beings I have seen my sister struggle with it for the last 15 years, and I myself, have become her “bank,” I was wondering if you could give me any advice as to what I should do, what I should be skeptical of, and if you could recommend what their actual theory is!? I have been reading blogs, pros, cons, etc. . . for the last 3 hours online, and I am getting mixed emotions about it. My main concern is that I will not be able to make the “dreams” of the families I visit come true, and in some way, will be doing people a disservice, RATHER than a SERVICE!

Megan,

The problem here is that I’m far from qualified to answer this type of question. So to that end, I’ve recruited a couple of highly intelligent financial experts to help answer just this question. Both of these people have had direct and substantial experience with the Primerica opportunity.

One of the things I pride myself on is a fair and respectful look at all angles of a discussion. So the articles posted here tell both sides of the story. If you have anything to add to this discussion, please do so in the comment section below. But remember–this blog is about finding the truth. If you find yourself becoming emotionally stimulated or defensive, you may want to think twice about commenting.

The following is one of two articles I’ve received from two different contributors–One pro and one con. In order to get a balanced look at the Primerica opportunity, I would highly recommend that you also read this story as well.

So without further ado, I present Ken, and his reply to Megan and all of you out there trying to make the right decision.

Secrets of a Primerica Graduate

By Ken

Megan,

Congratulations on doing some research prior to dropping $99 for the “opportunity of a lifetime”. I wish I could say the same, but \several years back when I was drawn in, it cost me around $200. Although Primerica does offer an opportunity to make big money, the odds of “making it” parallel your local lottery. Even if you did begin to make a lot of money, you’ll have to wonder “at what cost?”

First and foremost, Primerica is a multi-level marketing company. Some would compare it to the old pyramid schemes. The basic gist of any multi-level marketing company is that in order to make serious money, you must “recruit” or bring more people into the company. After careful examination, you’ll notice that recruiting becomes the main focus of the business. The reason for this is because as you recruit more and more people, you get “promoted” to higher levels of commission. This means for everything you sell and everything the people you brought into the organization sell, you make more of a percentage of the profit. The important thing to realize is that although MLMs are not illegal, some would argue that the products are what “validates” or legalizes the business model. If you remove the products, you return to a pyramid scheme.

What does this all mean? Basically, you’re a professional recruiter. Although you’ll learn about some basic financial concepts, you’re a recruiting machine at Primerica and any other MLM company. I’ll address the products later. When you’re a recruiter, your job is to entice as many people to “opportunity meetings” as possible. The opportunity meetings are facilitated by successful individuals. They have convinced a lot of people that Primerica is a great career decision. After you attend enough of these meetings and other trainings, you’ll begin to pick up all of the techniques used by those that are successful.

The techniques for recruiting are time-tested and you may have even heard some of them yourself: “We’re opening some offices in the area and I’m in charge of expansion”. Sometimes they’ll come into your current place of employment and say: “I can’t help but notice how well you took care of me, I think you’d be a perfect fit in our organization”. Sometimes, they’ll just advertise on websites like craigslist, asking you to send them your resume for a job opportunity.

Once contacted by one of these folks, it’s very important to realize that they can be anywhere in their career with Primerica. They could have been there 15 years, or most likely they’re either brand new, or only a few months into the business. They’re not going to get you to the opportunity meeting by telling you they’re brand new, haven’t sold a thing, and really dislike all of the hard work. Instead, they’re “taught” to make it sound great. Everyone’s making a lot of money “helping middle America”. They’ll tell you they’re either doing it full time, or just about ready to make the transition to full time.

Truth be told, most of the people in the office make very little money in respect to how many hours they put in. There are a few superstars that may make a few bucks, but it’s all due to recruiting. They may have known a lot of people, started an office in a newer area, or are a natural at recruiting. The other very important factor to remember is that you’re taught to constantly ask everyone you run into about sitting down with you so you can show them how you can help them financially. Realistically, the sales presentation is a self-guided recruiting presentation. They introduce the company, show the “client” all of the things they can do for middle-America, then the real closing comes in. They ask you for referrals and see if you want to join them on this fabulous crusade.

Who do you talk to? EVERYONE! This includes family, friends, co-workers, etc. After hearing a few success stories at the office, you go on auto-pilot, asking anyone you see: The waitress who serves you at the restaurant, the clerk at the video store, etc. You’ll slowly irritate everyone you know to the point that you’ll be alienated by friends, family and co-workers. You’ll start parroting the same old stuff so often, you’ll actually trick yourself into believing you’re even making money doing it. Them reality sets in and you slowly fade away from Primerica. The timetable varies, but it’s usually the same story.

If this still sounds like the opportunity of a lifetime, let’s talk products. If it’s not an illegal pyramid scheme, there has to be some products involved. Like Amway, Mary Kay Cosmetics and Avon, Primerica has products. The priducts are financial services. They include life insurance, annuities, mutual funds, and mortgages. Whoa…sounds pretty serious. Yes, you’ll need licenses to sell all of those things. If you’re not a good test-taker, stop right here. The most basic license you’ll need is for life insurance. It’s the easiest one to achieve and ironically the one Primerica will make you get in order to start. Once you’re a licensed representative, you can begin selling the opportunity. Less than 25% of Primerica agents are licensed to sell securities. That means that although they “teach” you to invest money for the long term, most agents can’t even help you do it. In fact, it’s illegal for them to even discuss it.

The Primerica mission is to “help people become debt free and financially independent”. How do they make their clients debt free? They have a very basic computer program that teaches the clients elementary debt stacking—a technique that shows the most efficient way to pay down debts. The other way is to do a cash-out refinance on the client’s home. To do this, the client must owe significantly less on their current mortgage than the home is worth. Prior to the recent downturn in home values, this was a lot easier to do. However, adding your credit card debt to your mortgage is hardly “eliminating debt”. Sure, there are some tax advantages to doing it, but it’s certainly not eliminating debt. One further thought…isn’t Citi, the parent company of Primerica, one of the largest players in credit card lending in the nation? Interesting how they want you in debt, then they want you out of debt???

To entice people into entering a mortgage contract with Primerica, they have come up with a pretty tricky way to make the clients believe they’re getting some financial benefit available only with Primerica. The basic concept they try to tell you is that if you pay you mortgage bi-weekly through their “SMART loan”, you’ll have your mortgage paid off sooner than doing it with another lender because of their simple-interest calculation. While this by itself has merit, the problem is that Primerica’s SMART loan comes with costs and rates of interest much higher than regular mortgages to the point that the simple interest feature is a moot point. The next step that the SMART loan takes is advising the client to pay more money per month to get the loan paid off even sooner. Like any loan, this is a true statement.

The bottom line—anything the SMART loan can save the client, the client can do better outside of Primerica. If the SMART loan predicts a loan payoff of 20 years, the client can go right into any bank, like Citibank (a subsidiary of Citigroup, as is Primerica) and ask for a conventional 20-year loan. The conventional 20-year loan will have lower costs and monthly payments than the SMART loan. It’s that simple. The SMART loan does have the upper hand when accelerating payments if it was comparing solely to a 30-year mortgage. However, once the smoke and mirrors is lifted, the math shows that instead of paying all sorts of high fees to Primerica, the client will save more money simply refinancing to a loan of a shorter term at their local bank.

Next on the Primerica financial offerings menu is life insurance. For years and years, Primerica followed the A.L. Williams philosophy of buying term insurance and investing the difference on your own technique. This was an answer to the previous cash value life insurance programs, which were often misrepresented by unscrupulous sales people. Some of these sales people promised huge returns in the cash value portion of the insurance contract. Many times, these forecasts made the owners feel they could stop paying their premiums and inevitably the contract cancelled for non-payment of premium. Although permanent insurance may not be the best choice for some people, it’s hardly the “bad guy” of life insurance that Primerica projects.

The days of misrepresenting these contracts is for the most part over. However, Primerica continues to bash every type of permanent life insurance contract. Instead, they recommend buying their term life insurance (at exorbitantly high premium rates) and investing the difference in premium (when compared to a cash value policy) into mutual funds. The problem here is twofold: First, most Primerica agents aren’t even licensed to talk about, much less offer the mutual funds to their clients. Second, the loads (fees) on the mutual funds that Primerica does offer, makes the fees they bash on cash value policies pale in comparison. So, on one side of their mouth they continually bash what they consider cash value policies laden with high fees, and out the other side of the mouth tell you to buy their term insurance which costs upwards of 50% more than highly ranked competition and invest in their high-cost mutual funds.

The real problem is that the average Primerica agent knows very little about what they’re actually talking about and the average American knows even less! The only training they have is from Primerica, on Primerica products. If someone works at Burger King, they’re not going to know everything about the Big Mac. They might “know” the Whopper is better, but they don’t know why, except that is what they heard at training. The same thing happens at Primerica.

Some would argue that the reason Primerica doesn’t offer any cash value policies is that their sales force would then need to study for and pass the securities exams, which are certainly not easy. Again, revisiting the early concept of “validating” an MLMs existence is the products. If you put one more obstacle (the test) in the way of being able to join Primerica, how much would that cost the company? Instead, they forgo the test and continue to vilify a product they know little about—permanent insurance.

What happens once you join Primerica? Besides the original down payment to become an independent business owner (by the way, you never “own” anything), you’ll be responsible for buying brochures and pay for a monthly on-line service that gives you sales techniques and helps you track your production. Full-time financial professionals don’t pay for these services with their companies. Primerica makes the new agent think they’re business owners so they accept the fact that the agent will foot the bill for these expenses, not the multi-million dollar earning insurance company.

So, Primerica plays a role as the “good guy” in a world of finance where all the banks want you to do is be stuck in debt, right Citi? They do in fact get some people without life insurance the much-needed protection they need for their family. That by itself is great! However, charging the astronomical fees for each and every product they offer, the misleading mortgage product they have, and the fact that the company doesn’t require the agents to get licensed to help people invest is ludicrous. Presenting a very basic Primerica Financial Needs Analysis and comparing it to some well-written, in-depth, client-specific financial plan by a real financial planner is ridiculous. There are several companies that will offer free plans that make Primerica’s FNA look like a joke.

Losing friends and family, offering overpriced, lackluster products, all in the name of making a buck— Is this your idea of “helping people become debt-free and financially independent”? When you look yourself in the mirror, are you comfortable knowing that what you advise people to do can make or break their financial lives? Are you comfortable even telling yourself what to do financially? You certainly aren’t going to learn anything in Primerica that will help you feel like you could. Again, they’re an MLM—a pyramid validated by a product; it’s not a very good product. See you at the “top”.

[important]If you found this article helpful, for more information, be sure to continue reading the educated and respectful comments below.  But also be sure to read this Independent Analysis of the Primerica Opportunity.[/important]