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.

Overview

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]

Products

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.

Opportunity

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]

Recap

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)

Meet the Author

Jeremy Page

Jeremy Page teaches network marketers (company cheerleaders) how to build a real business. Far from a hater, he still LOLs at 3-way calls and building "downlines". If you like Monday morning conversations with your kids by the pool, you might like this.

2 comments… add one
  • Sam M. Apr 18, 2017, 9:24 pm

    Mr. Page,
    This was my experience with a few minor additions… When I got a call for the interview, the agent didn’t even mention what company I was interviewing for. During the interview I was NEVER told they make their money (90-95%) from life insurance. The interview was also conducted by the person who called me, and the regional vice president. In addition it also had a 90 minute presentation with a promotional video, and they apparently forgot to mention the financial planning portion of their business was just to get into the clients house to offer them insurance. They do provide services other than insurance; however, none of these products (sales) are mentioned during their motivational meetings, nor do they count toward any bonuses or company competitions. They only stressed making insurance sales, and getting recruits. (They had a running tally of that months premiums, and recruits)
    Furthermore, while the products and services they offer aren’t bad (by any definition of the term) the last agent in does more work, and gets paid less than the other agents. (Those higher up on the pyramid) While I agree that seniority should count for something, I don’t understand why these people, whom I have never met, should get a paid for my hard work. (Both the person who recruited me, the person who recruited them, and so on… ) So basically unless you can make a list of about 500 people (this is not a made up number, but what was requested of me by another agent (The agent who recruited, the agent who recruited me)) you will not be successful. Furthermore, the company ranks all of your personal associates on a scale of 1 – 5, where they get one point for being married, one for having kids, one for being under 55, one point for owning a home, and one more point for being employed. This determines any given individuals NEED for insurance. You will be asked to schedule appointment with your friends and family based off these numbers. (With those who score lower being given a job pitch) My experience with this was that many people either can’t get insurance because of preexisting conditions ( just change that score to a 0, they don’t suggest this but don’t waste your time), or think that all insurance is a scam (After studying the insurance regulations, I’m inclined to agree. There is only ever a chance that insurance will pay, even if you end up taking them to court.) Oh and it’s a federally and state sponsored system, so while the insurance commissioner may throw someone under the bus occasionally, it is only in the governments best interest to let the insurance companies make as much profit as is humanly possible. Most (but not all) benefits are tax free, while profits from a business are taxed normally. Furthermore since insurance companies are themselves insured by the government, when they go bankrupt the executives (who have spent years earning outrageous bonuses) can reincorporate the company under a new name and start over, leaving the government to flip the bill for the insurance that was not paid before the company went bankrupt (however the government has limits on the amounts you get in benefits, so the clients get significantly less money from the government then they would from the insurance company) So to conclude, this is not bad insurance for the clients, but utterly dreadful for the employees. You work long hours trying to get that first 1,000$ in premiums, and 3 recruits just to get your first check for 300$ AFTER you invest around 125$ just to get the position and licensing. (25$ covers access to Primerica online, with the rest going to pay for a 4 hour class on insurance to help you get licensed. The class does come with a 45 page black and white photocopied notebook…) Still, every month you can do this same amount of work, you will get paid a little more each time while your boss, and your bosses’ boss can focus on recruiting more people for the base of the pyramid. If you know a lot of people, If you know they need insurance or are underinsured, If you know they have money they can spend on insurance, If they don’t have preexisting medical conditions, AND you can convince them to get their insurance from you, this job COULD be a good fit. For me however, I did not find this to be the case.

  • JRW Jun 7, 2017, 6:49 pm

    This is a well done article to a point. Where it breaks down is in the conclusion. You see, all financial services rookies to some degree or another alienate friends and family. That isn’t just an MLM problem. That is a professional personal services problem. It’s 0.01% of all people’s that want a job where you end up, to some level, anonymous from the client. But we’d be foolish to think we can build a business where we entrust people with our wealth or future and remain detached from them.

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