Thoughts on Primerica’s Term Life Insurance
Wednesday, June 17th, 2009 Subscribe To Our Feed
Primerica, originally an insurance company, has existed in Canada for number of years. Primerica’s main business consist in term life insurance, but other services are also provided: investing in Mutual Funds, debt consolidation and other. There are 3 other states where Primerica operates: the United States, Spain and Puerto Rico. The company was established in 1977 and was subsequently owned by Citygroup for many years. As part of the company restructuring, just a few months ago it was sold to one of the Warren Buffet companies.
Speaking from a position of an independent life insurance broker, I would like to share a few thought on Primerica’s services and also the world of insurance business. Since most of the articles I came across on the Internet dealt only with the way Primerica operates, I will start with some remarks concerning the Primerica’s major product – Primerica Life Insurance, and then comment on some aspects of the company that most likely have some heavy effect on the quality of their services.
One policy fits all?
The Term Life Insurance is the only sort of life insurance offered by Primerica. There’s nothing wrong with the term life insurance, but this policy simply cannot be the most accurate for just about anyone out there. What about whole life or universal life insurance? They were not created just for the laugh of it. There are many instances when a different type of life insurance simply fits better, like child with a permanent disability, insurance needed to offset taxes on an investment property, or the transfer of a family business.
How much?
Many of Primerica policies cost much more than the similar policies of their competitors by 30 to 40%. That’s caused by the structure of the company, which I will discuss at the end of the article. But to be fair, the company offers 25 and 30 year term policies, which are very hard-to-get with other insurance companies in Canada. So within certain age groups Primerica is somewhat competitive.
Convertibility
As I said before, Primerica only offers term life insurance, therefore it cannot be converted, because there’s nothing to convert it to. You have an option to keep renewing the policy, but the cost will sharpen rapidly with every new term.
In my eyes, these are the main flaws with the Primerica life insurance. But the insurance business – just like any other business – is not just about the product. While the product is what you sell, the conditions within the company define who sells it. Let me show you what it is I have in mind.
The conditions within
Imagine you are at the beginning of your career and the choice is to be a financial adviser. Naturally you would like to be successful and also respectable in what you do. To achieve that, you need the following three conditions: 1) have enough knowledge, 2) being able to choose from a selection of products that fits the needs of your clients and 3) be financially motivated.
Condition 1: With Primerica, you only get a training lasting for just a few weeks that only prepare you to deal with the client. At the start you will not have much of an idea of what exactly you are selling, unless you’ve previously undergone some education regarding personal finances. Of course there are many experienced advisers within the company, but the truth is most of the clients are served by inexperienced sellers, since those more experienced mostly concentrate on building their own team of advisors.
Condition 2: Unless you are an independent life insurance broker or independent financial advisor, you cannot shop around for a better deal, company or product – as simple as that. It makes no sense to me – to voluntarily limit myself to selling products of only one company. What if my clients need something else?
Condition 3: Since Primerica uses the structure business model, commissions are divided between 4 people. As the result you get less money than if you were selling similar products without having to pay the structure above you. Primerica’s respond to this argument is to “built your own team”. On the one hand Primerica would like its advisers to be something like financial doctors, showing people the way in the out of the financial services jungle. But wait a minute: I have never met a doctor that instead of attending the sick is in fact recruiting and training other doctors and then collecting a part of their pay. Working full time, concentrating only on the main job and not getting distracted with all the recruiting and training – doesn’t that make more sense?
As I said before, I’m pretty sure there are some very good advisers out there in Primerica. My only point is that it is much easier to be a good financial adviser when you are not tie to any particular company, have accordant education and don’t feed additional three levels of advisers above you with your commissions.
Travel Insurance Policy
