Sunday, January 15, 2017

How Primerica’s founder built the first successful life insurance MLM

Primerica has an unusual sales strategy for its industry, and an unusual industry for its sales strategy.

That is to say, life insurance isn’t a typical MLM product, and direct selling isn’t a common method for selling life insurance.

Does this mean I’m involved?

This video explains everything:

Make sense? Either way, here’s the full review on Primerica.


Primerica was founded in 1977, went public on the NASDAQ in 1983, and recently split off from their parent company Citigroup in 2010. They’re now headquartered in Duluth, Georgia. [1]

According to Forbes, Primerica founder A.L. Williams, began his career in life insurance when his father died and their whole life insurance plan ended up being worthless. He was distraught by the poor options for life insurance and lack of knowledge regarding those options among the mainstream population.

Basically, back in the 70s, companies were pushing expensive whole life insurance policies on Americans who didn’t have a lot of financial knowledge, convincing them that it would not only protect their family in the event that they die, but that it was also a very smart investment. Whole life insurance pays out no matter what, accrues interest over time, and you can even take out loans against it, whereas term life insurance only pays out if you die within the policy’s term (10 years, 20 years), and it has no cash-in value.

So, it sounds like term life insurance is throwing your money away, and whole life insurance is investing it.

But here’s the thing: term life insurance is super cheap…like, a few dollars a month cheap. Whole life insurance is very pricey, often in the hundreds, and a lot of these predatory companies promised lifetime payout but found loopholes to get out of paying out once the insured person actually died. Exactly what happened to A.L. Williams when his father died.

So, he started Primerica (first called A.L. Williams & Associates) as a life insurance and financial services company that would serve Main Street America. Their slogan, “Buy Term and Invest the Difference” and their focus on educating mainstream America about their options caused many people to leave their whole life insurance policies and buy into this new term life insurance company. [3]

Pretty quickly, they grew to become the largest seller of life insurance in the U.S., and they really did transform the industry. [4]

Now, Primerica is the largest independent financial services marketing organization in North America. [5] Operations extend throughout the U.S., Canada, nad Puerto Rico. Their revenue in 2013 hit a whopping $1.27 billion, and their total equity is $1.34 billion. [6] [7]

They’ve also got insane profit margins – in 2014 they hit over 14% net profit. The average net profit margins for the insurance industry? 4-5%, if you’re lucky. [8]

Primerica started out with a great mission that transformed the industry, but a lot of their success has been due to the way they treat their employees and agents (distributors). Right off the bat, A.L. Williams knew that his sales people would be the life blood of his company, and he places a huge emphasis on “pushing up” his employees by holding weekly video conferences with them and speaking to each one of his hundreds of thousands of agents personally.

It shows, too. Their employee reviews on Indeed are extensive, and with 1.3k reviews, they still manage to maintain a 4-star rating. [9]


Primerica’s life insurance and financial services products include:

  • Term Life Insurance
  • Mutual Funds
  • Segregated Funds
  • Annuities
  • Manages Accounts
  • Long Term Care Insurance
  • Legal Services
  • Auto Insurance
  • Homeowners Insurance
  • Credit Monitoring
  • Debt Management Plans

I won’t bore you with the financial details of each and every product, but I will talk a little about some of their more popular products.

Term Life Insurance

This is the product they’re most known for. Their term life insurance plans are reasonably affordable, and they were given an A+ superior rating by A.M. Best, a rating only the top 15% of life insurance companies achieved. [10]

In 2015, they paid out a total of $1.2 billion in death claims, and 92% of their claims were paid within 14 days. [11]

The biggest complaint most people have about life insurance companies is that they find ways of not paying after your loved one dies, so the fact that they pay their claims on time and with reliability is a huge strength.

One of the big drawbacks here is the fact that they use network marketing, so their Agents have a high turnover rate. As a customer, instead of working with the same person for years, (someone who has likely built a career in life insurance), you could be working with a life insurance newbie who’s going to quit in 6 months.


There’s a $99 cost to join – more and more, it’s looking like this is the standard price for start-up kits at newer MLMs.

You don’t get any product, obviously (no physical product to be had), but it does pay for state insurance and financial services exams that you may need to take as well as your license to sell life insurance.

They highly encourage you to pay an extra $28/month for access to their online tools.

Commission is 25% on all financial services sales, which is kind of low, but not bad considering that the product is recurring monthly as long as customers don’t cancel their policy.

Your commission can jump all the way up to 70% if you can advance your rank quickly enough, and you also get 10% overrides on your personal recruits.

You’re highly encouraged to start with a “warm market” – a list of friends and family you want to sell to. First red flag. MLM destroys friendships, no joke. You don’t want to be THAT guy who’s trying to make a dollar off your cousin.

What’s even worse, though, is when you run out of “warm market” friends to listen to your sales pitch and you have to hit up your “cold market” – aka walk up to random strangers and ask them to buy your life insurance. Sound like fun?

To most people, it doesn’t. That’s probably why the average Primerica rep only makes barely over $5,000 in annual income. Literally below the poverty line. [12]

Also wayyyyyyy less than what you can make working for a traditional life insurance company (average salary at State Farm, for example, is $32,000). [13]


So the company is legit, and their life insurance seems to be some of the best on the market.

Primerica’s also got a great corporate culture and a solid mission.

But the direct selling structure is their fatal flaw: it’s just not possible for over 99% of the people who buy into MLM to make good money, especially not without alienating their friends.

It’s just not a strategy that works for anyone but the top .001%.

If it really is the products that intrigue you, and you want to give it a shot, going with a company that has been in the game a while isn’t a bad way to go.

But if it’s just the income opportunity you’re after, you might be wasting your time.

If you like automated ways to build passive income, there are better ways.

(and you can trash those old MLM habits, too)


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