Primerica Pyramid Scam? – The Darkest Secret No Reps want you to know!
Were you introduced to Primerica through a friend or an acquaintance?
Or maybe you were offered a job as a financial representative?
If you've landed on this page, I am sure you have lots of questions regarding this company.
Some people claimed that it is one of the best opportunities out there that can bring you out of poverty.
While some people claimed that Primerica is a Pyramid scam.
So, what exactly is the truth? You are about to find out in this Primerica review...
I can say that Primerica works similarly with other well known financial institutions.
I know it because I was a financial representative for one of the well known financial institutions.
And, it was my first ever job I took after graduation.
But, could we call those Financial Institutions a pyramid scheme as well? Let's find out...
Is Primerica a Pyramid Scheme?
I'll be very honest with you...
The entire finance and insurance industry is derived from the concept of a pyramid.
Though it is not disclosed publicly, the people working in the industry know.
Well known financial institutions like AIA or Prudential, works this way...
How Most Financial Institutions work?
There are several ranks to climb before you can actually set up an independent agency with the company's brand name.
Everyone starts as a "Financial Consultant" or whatever names they call themselves nowadays.
And, as a Financial Consultant achieves certain milestones, they advance to the rank of a Manager.
As a manager, your commission rate increases, and you are now allowed to recruit new Financial Consultants and earn 2nd-tier commissions (earn a cut of the recruits' earnings).
There are certain criteria to maintain as a Manager, and failure to do so will bring you back down to the level of a Financial Consultant.
So, the job of a manager is to help the recruits stand on their own feet, and eventually become a manager themselves.
And, once a manager is able to help a few Financial Consultants become managers, the next rank advancement is the "director".
A director's commission rate increases as well, and can earn 2nd and 3rd tier commissions (earn a cut of the managers' earnings, as well as their recruits').
A director can also set up an independent agency with the company's brand name.
So, does this sound like a pyramid as well? I think so.
In the case of Primerica...
The fact that Primerica post themselves as a business opportunity, puts them in close scrutiny in the public eye.
While the well known financial institutions distance themselves from the network marketing industry...
Primerica puts themselves into it. And, because of the close ties between Network Marketing or MLM with a Pyramid Scheme, many people claims that Primerica is a pyramid scheme.
So, before you jump to conclusion, let's understand what a pyramid scheme really is...
In the books of the Federal Trade Commission (FTC):
So, the following questions will help you determine if Primerica is really a pyramid scheme...
- Have any real products or services? - Yes, the company sells Financial Products, much like any insurance companies do.
- Compensate its distributors (agents) for a successful recruitment? - No, distributors get compensated when their recruits made an actual sale of the products.
- Sells its products only to its distributors? - No, the financial products can be sold to anyone.
So, I would say that if Primerica is a pyramid scheme. We could possibly call all financial institutions a pyramid scheme as well, don't you think?
If Primerica is a Pyramid Scheme, can we say that all financial institutions are pyramid schemes as well?
Leave a comment below and let me know what you think.
I would think that people called Primerica a scam simply because of the high failure rate, and ill practices from some representatives.
Primerica Business Opportunity Review - How the Compensation Plan Works?
Let's take a close look at how the Prmerica Compensation Plan works...
Now you must be thinking, if Primerica pays a 110% commission to its representatives, wouldn't the company be making a loss?
Here's what you need to know...
A financial service product is a long term commitment!
Primerica pays its representative commissions on the first year's premium, and that's it!
For as long as the financial product is in service, Primerica earns on all future premiums.
That's basically how most Financial institution (FI) works as well.
In the FI that I used to work for, I was paid a 50% commission on the first year premium.
20% commission on the second year premium.
And, 6% commission on the third through to sixth year (for as long as the financial product stays active).
The Dirty Secrets in the Financial Industry you should know!
There is a fine line between helping people and badgering people to sign up to a financial product.
Yes, insurance and other financial products are a necessity in our everyday lives, but to what extend do we need them?
Do we buy financial products for the sake of getting the highest coverage and investment returns, or do we buy it based on our financial capabilities.
Some Financial representatives do not understand the meaning of affordability.
All they were told was to sell, sell, and sell.
I've met with many financial representatives, and as you know I was actually one of them in the past. So, I kind of know what is going on in the industry.
Foot soldiers at the bottom will usually take advice from their managers or mentors (on the kind of policies that will make them the most money).
Almost everyone in the industry is driven by money, so they sell the most profitable financial products, even though they know that it is not suitable.
This is the darkest secret no one in the industry wants you to know.
So, if you are thinking of buying a financial product from Primerica or any other financial institutions, make sure that you do proper due diligence instead of trusting the representatives.
A former successful Primerica's Regional Vice President confirms what I said in this post.
Primerica Customer Reviews - Complaints
Due to the MLM nature of the company and their very open recruitment policy, there are large amounts of negative reviews on the company and their level of service.
Most of the reviews deal with representatives or some of the company's operations coming from disgruntled ex-members of the company.
Common complaints include overselling, aggressive sales techniques, lack of internal support and accountability.
However, there are very few complaints with regard to the products being sold, which elevates the company’s reputation a little.
This however could be due to the nature of the industry in general, where things are clearly written on coverage and payouts when signing the papers.
What is Primerica? - If you don't know it yet
As the name suggests, Primerica is a US-based Network Marketing company that deals with financial products like insurance and funds.
The company focuses on the sale of term life insurance as well as providing other financial products and services including:
- Mutual funds
- Segregated funds
- Managed accounts
- Long-term care insurance
- Pre-paid legal services
- Auto insurance
- Home insurance
- Credit monitoring and debt management plans
The company has more than 4.3 million life insurance clients and over 2 million client investment accounts.
Primerica does not publicly list it’s product prices.
They are gauged based on each individual and require some level of tailoring for each individual.
Despite that, the reviews and pricing on them have been considered to be very fair.
The products they offer are genuine unlike some other unscrupulous MLM companies.
However, there is a good chance you can get similar products from other financial institutions with much higher level of transparency and reliability.
What it really means to join Primerica? - The Bottom Line
To join Primerica as a member means you will be operating as one of the representatives selling the various insurance and financial products.
The representatives can carry as either on a part-time basis or full-time.
You will be paid based on a portion of the products you sell and the performance of the people you recruit into the company.
In simple terms, you are a salesperson.
How to Join Primerica? - The Barriers to Entry
The process of joining Primerica is fairly simple.
You will be required to pay an initial joining fee of $99. This joining fee, supposedly includes a background check to see if you are eligible to join.
The most common criteria to pass this background check is whether or not you are a declared as a bankrupt, among many other criteria.
In the previous financial institution I worked for, the background check fee is paid by the person who recruited me.
I guess Primerica is doing things a little differently.
But, you need to know that fees are being paid to third parties to do proper background checks, so most likely, you will get a refund (but not the full amount) if you fail the screening.
Another difference between Primerca and other financial institutions is that you are required to pay a monthly fee of $25 to maintain your membership status.
Your membership status grants you access to various financial tools and cheaper financial products for yourself.
Whereas, in other financial institutions, the tools are given to you, but you won't enjoy a cheaper rate of products.
On top of that, you will be required to obtain a license to sell financial products depending on your juridical laws.
This is an additional process you will be required to do outside of the company, though some form of assistance may be provided to you from Primerica.
The time it takes to be successful with Primerica...
While Primerica may advertise themselves as being flexible based on your time...
In the event that you had no prior experience in finance or sales, you will be spending lots of time studying.
This is unlike other network marketing companies where you can start selling products immediately.
Because the financial industry is regulated, there are some steps you need to take in order to be qualified.
The barrier to entry will probably rule out those people seeking to make quick money.
The promise of it being part-time diminishes as you climb up the ranks.
And, you are required to take up a full-time position once you hit beyond a certain rank.
You will be required to be well versed in the product knowledge of other companies, while tuning a final product that is able to encompass all your customer needs.
Another issue you may run into is your weekly meetings with your recruiter or assigned “mentor”.
You will be reporting your sales targets and progress regularly.
And, the quality of your mentor may vary...
They could either be about the most helpful people you can get, or absolutely horrendous offering little or no assistance.
To be really successful with Primerica...
You need to have an endless stream of new prospects to talk to. That's the bottom line.
The problem with the training in Primerica is that they rely strongly on personal selling and connections.
This involves you making a list of people you know that would potentially be interested in the products.
And, to revisit them over and over again until they purchase it.
These leads are bound to dry out and it will be a dent on your reputation from repeated calls and visits.
The archaic methods of selling are strongly prevalent in this company, when there are more efficient methods of selling like attraction marketing.
This is probably the main reason why the majority of the representatives in Primerica fail...
If you really want to be successful with Primerica, I would highly suggest that you learn the art of attraction marketing.
That way, you will never run out of highly qualified leads to contact.
Also, I want share with you some tips on how you can become a better network marketer.
How the Primerica rank advancement work? - The Recruitment
Recruitment will be an integral part of your rise to get higher commission rates.
You are required to recruit 3 other members to join in order to advance your rank.
One of those 3 recruits must also recruit 3 others in order for you to rise up the ranks.
It is estimated that in order to reach one of the higher echelons of the company, you will be required to recruit approximately 8-10 active members per month for about a year while consolidating their performance.
There is only so much insurance and financial products that can be sold on the market, which makes it harder for people to succeed the longer this goes.
Considering that this company has been around for many years, your chances of getting there is not high.
Your team is also a strong reason why they can promote a more lucrative earning for this job.
What they do not reveal is how much does each recruit sell per month on average.
Another worrying factor is the amount of people who join the company per year.
But, the amount of qualified representatives that they have on hand are vastly lower than the amount of recruits.
This means your recruits have to be of a certain quality or have enough potential to help you gain your earnings.
Even after that, your chain goes down up to 10 levels. I do not expect much considering the statistic of the qualified sellers.
Here's something really interesting I found on Business Insider:
My Sincere Advice to You
Is Primerica a Scam? No!
But, is the business opportunity suitable for everyone? Absolutely not!
If you are not sure Primerica is the right business opportunity for you, then I suggest that you read this article.
The truth is, there is a high failure rate in this opportunity, so it is super important to know what you are getting into.
If you can't answer the questions in the article, then I recommend that you stay away from Primerica.
Thank you so much for reading this Primerica review!
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