Disclaimer: We are not Primerica. This is simply our Primerica Life Insurance review.
You’ve likely heard of Primerica through a family or friend.
Primerica (or “Prime America” as some people erroneously call it) agents are trained to target their friends and family to help them with their financial planning, when in reality this is all in an effort to sell Primerica Term Life Insurance.
And after your Primerica agent sells you term life insurance or any of their other products (like mutual funds), they’ll ask you to join them so they can then earn overrides on anything you sell.
The agent who sold you his policy makes a commission and there’s nothing wrong with that…but so did his recruiter, his recruiter’s recruiter and so on. There are 11 total tiers according to Primerica’s public prospectus (page 112).
Primerica agents are encouraged to recruit more people to continue bringing in sales.
In fact, the average Primerica agent only makes $6,030 per year as of December 31, 2017 – and this comes directly from Primerica’s website buried in their disclosures (source). That’s because this business is a “side hustle” and you’re encouraged to do this part-time.
Do you want your life insurance and financial future planned by someone doing this part-time? I wouldn’t.
And it’s working well enough that they actually went public and are traded on the New York Stock Exchange.
Primerica Life Insurance
If you don’t want to read this entire overview of Primerica, just digest this one piece of information:
You can find better term life insurance and investment products by going elsewhere to compare rates.
Primerica is by no means a scam. Their life insurance products are fine but lacking. Their mutual funds are fine but are expensive.
Primerica is a more than 2 billion dollar revenue company and most of Primerica’s revenue is from term life insurance premiums. This is a life insurance company at its core. They insure over 4.4 million people.
Should You “Buy Term and Invest the Difference”?
Primerica agents are trained on “buy term and invest the difference”. Which basically means to not purchase whole life insurance. Primerica whole-heartedly believes everyone should own term life insurance and everything else is a rip-off.
Everyone is different. Some families want to pass on life insurance proceeds to their children, guaranteed – a guaranteed universal life insurance policy will help with that. Primerica agents can’t sell it.
Some seniors over 60 years old may want a small whole life insurance policy to cover their burial and final expenses. There are final expense policies out there available with guaranteed level premiums for the rest of your life – Primerica won’t sell these.
These are just 2 examples of dozens of situations where a permanent policy would be appropriate. Having a blanket statement that term is better for everyone is absurd.
Rating Primerica Term Life Insurance
So what about Primerica term life insurance?
Well, they can’t even compete there either. Term life insurance is a commodity – you can compare rates online and find much better-priced term life insurance. All the companies you’ll see quoted online will also have conversion options that Primerica does not have.
A conversion is the ability to convert your term life insurance policy into a permanent one with no evidence of insurability. What this means is you can simply fill out paperwork and convert all or a portion of your death benefit at any time during your term to a permanent life insurance policy.
But why is this so important?
The biggest reason is what happens at the end of your term and you developed a health condition where you can’t qualify for life insurance anymore?
With Primerica, you can annually renew but the cost skyrockets every single year. With other companies, you can convert your life insurance to a permanent product based on the health classification you received when you purchased the policy – even if that was 20 years ago.
95%+ of term life insurance companies on the market have these very important conversions options built into their policies.
Primerica’s underwriting is very tight as well. In our agency, we run across a lot of people who have been declined life insurance from Primerica because of health or lifestyle issues, but we were able to get them affordable coverage. For example, were able to help some people with Hepatitis C, COPD and Type 1 Diabetes that were declined by Primerica.
When it comes down to it, you can get better-priced coverage with more flexibility with other term life insurance products on the market from a company like MetLife.
How Primerica Insurance Works
As we said above, the average agent makes $6,030 year. Most recruits are sold on the dream of what their top tiered agents are doing and go to work part-time with that dream in mind.
Primerica is Multi-Level-Marketing. No matter how a Primerica agent will spin it, it is. Becoming a Primerica representative costs $99 upfront and you’re highly encouraged to pay a $25/mo fee for access to Primerica Online. Primerica boasts 100,000 reps – so $2.5 million dollars in recurring fees on top of the 15,000 or recruits they get every month (9 out of 10 don’t make it) that pay $99….and this is all from Primerica’s own “employees”. It doesn’t even count the commission income.
There is no inventory, you have to pay fees and there are 11 tiers above an entry point. This is multi-level marketing. Even the first line on Wikipedia says it:
And I know it’s painful to read this as it’s likely your family member or friend that’s “drinking the Kool-Aid”. They really do mean well and I don’t mean to downplay the actual agents that are working with Primerica.
If you were proposed term life insurance from them, you can do much better. This is a payment you can potentially be making for 10-20+ years – you want to make sure you’re getting the absolute best rates on life insurance.
History of Primerica
Primerica was formed in 1977 by a life insurance industry legend, A.L. Williams. He designed Primerica around the concept of “Buy Term and Invest The Difference” and used to write life insurance underwritten through Financial Assurance, Inc.
In 1980 A.L. Williams entered into a contract with Massachusetts Indemnity and Life Insurance Company, a subsidiary of PennCorp. In 1983, PennCorp merged with American Can Company and in 1987 the American Can Company changed its name to Primerica Corporation. That’s where the name Primerica comes from.
In 1998 they became affiliated with CitiGroup. In 2009 Primerica went public. In 2011, CitiGroup sold off its remaining shares and they discontinued their association with CitiGroup.
There have been some household names associated with Primerica – Travelers Insurance and CitiGroup specifically. Both of them have distanced themselves from Primerica.
Final Thoughts on Primerica Life Insurance
If you just do a little bit of Googling, you’ll find widespread skepticism about Primerica.
There are lots of pages on the net of ex-Primerica agents “telling all”. Reddit has some good ones as well.
Just know that you can buy a better term life insurance policy. There are other companies like AIG who can offer more competitive pricing.
Simply compare quotes online to what your Primerica agent is recommending you buy and ask about conversion options as well.