YOU ASK:

What's wrong with Primerica life insurance?

WE ANSWER:

Primerica Financial Services sells life insurance policies through a multi-level marketing scheme. Primerica is part of CitiGroup and dates back to the late 1970s. It sold term life insurance policies using the catch-phrase: "Buy term and invest the difference."

However, there are some issues that you should consider before you get a policy with Primerica.

Lack of product diversity. For Primerica, "one size fits all" seems to be the operating policy. The thing is, each of us have different family and financial circumstances that will need a particular life insurance product. This is particularly true when you are talking about insurance coverage that is needed during the lifetime of the insured. Some examples include the transfer of a family business from a parent to a child, the insurance that is bought for the purpose of offsetting property taxes or life insurance that is aimed to cover a special child - one with a permanent disability.
The products are non-convertible. Since Primerica basically sells term insurance, you can't convert your policy into a permanent one, should the need arise. You may need to buy another life insurance policy (this time with a permanent insurance coverage) later in the future, when you may be charged with a significantly higher premium rate. The insured also runs the risk of being rejected for his new application, should his health condition change for the worse.
High premium rates. Because of the multi-level marketing scheme, where it is not only the agent who sold the policy that receives commissions but the upper layers of the "pyramid" as well, the premiums are considerably higher. The policies from Primerica may cost 30 to 40% higher than life insurance products from other companies.
Multi-level marketing sales program. Primerica's formula for success for their "agents" is that they should recruit, in order to earn. Each recruit pays a "joining fee" to become part of the network. It is likely that a large percent of the recruits will not be able to recoup this investment. Although the company provides refunds of the joining fee, they will not give back the full amount but will deduct an administration fee.
Uncompensated sales. While the new recruit is not yet licensed to see insurance, they are accompanied by their "upline" to sales calls. It is their upline who makes commissions from the sales. So that means that the first couple of weeks of the new recruit is virtually uncompensated.

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