Primerica financial services company has its roots back in 1977, when its founders spearheaded the “buy term and invest the difference” movement that had already taken root in the minds of some Americans as the public was slowly growing disgruntled with the then-trend of being sold whole life insurance.
Primerica specializes in term life insurance products. The company does not deal in any other kind of life insurance. However, the company also offers investment services including stock brokerage services and mutual funds. Like most of the big life insurance and financial services companies, Primerica offers people a free Financial Needs Analysis (FNA) to help them get a better understanding of their own personal financial situation, money management habits (good or bad), and financial product needs. The idea with FNA is to help make sales, but it’s also about showing people exactly what they need and then matching those needs up with the most appropriate products offered by Primerica.
Primerica has grown into a very large life insurance and financial services company and has become part of Citigroup (the latter, which is the world’s largest financial services company, manages over $2 trillion in assets and is one of the 30 member companies that create the Dow Jones Industrial Average).
The salient facts on Primerica listed by the company are:
*Primerica serves six million clients in the U.S., Canada, Puerto Rico, and Spain
*The company has over 100,000 licensed representatives, including 25,000 licensed to sell mutual funds, and to them paid over $682 million in compensation in 2007, making theirs the single largest sales force in North America
*Primerica placed over $90 billion in life insurance in 2007 alone, and the company’s securities clients have $40 billion in assets invested in the care of Primerica
*Primerica pays out an average of $2 million a day in death benefits
*Independent insurance company rating institution A.M. Best in the Spring of 2008 gave Primerica a financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa” in recognition of “its continued strong profitability, leading position in the U.S. term life insurance marketplace, strong risk-adjusted capitalization, and favorable liquidity profile.”
Primerica also actively encourages the general public to live within its means and stop the consumption habits that have the average American household owing 20% more in debt than it brings in in annual pay. The company says Americans need to learn to stop habitually using revolving lines of credit (credit cards), to get on a fixed debt program and get debts paid down and paid off, and if need be to make lifestyle changes with these ends in mind. “Wants” must be separated from “needs”, says the company in its ongoing efforts to make people’s financial lives more safe and sound.
However, despite these good qualities of the company, its name continues to be tainted by much of its sales practice. Primerica has many licensed agents who only work part time for the company, hoping to make a little extra money on the side. The company also has many more licensed agents who can only sell life insurance than it has those who can do a full FNA and sell the full range of investment products to enable people to “buy term and invest the difference”.
Since Primerica’s term life premiums are far from being the cheapest, and since it encourages a very aggressive sales methodology to be carried out by many agents who, since they are just part time, lack experience and expertise, a methodology that actively encourages writing replacement policies (kicking out a household’s current life insurance and replacing it with Primerica), if a Primerica client does not in fact “buy term and invest the difference”, that client is getting a raw deal. Much of Primerica’s placed insurance gets replaced by other companies who offer better premiums and better client service by better trained agents.
