For Primerica reps, 'opportunity' becomes a pitfall

The insurance company charges new recruits $99, but more than 80% drop out without passing the licensing exam.

By Aimee Picchi Jun 26, 2013 1:03PM

The Primerica Inc. headquarters in Duluth, Ga., on March 30, 2010 (© Chris Rank/Bloomberg via Getty Images)Primerica (PRI) has grown into one of the most profitable insurance companies by promising opportunity to thousands of would-be representatives by dangling the potential to earn $100,000 or more a year. 


But as Bloomberg Businessweek reported, the company's promises of advancement and earnings don't work out for the majority of new recruits, who each pay a $99 fee for the chance to join the business, according to company documents.


Take last year's recruitment numbers. Primerica drew 191,752 new recruits in 2012, according to a regulatory filing. That means it may have booked nearly $19 million in fees from hopeful applicants.


But only 34,425 became newly licensed insurance sales representatives in 2012, suggesting that roughly 80% of the initial applicant pool dropped out.


Recruits typically need three months to pass their state licensing exams, so some may have qualified in 2013, the filing notes. A spokesman for Primerica didn't immediately return an email seeking comment.


Primerica has built a profitable business by combining a financial-services firm with multilevel sales techniques, similar to companies like Avon Products (AVP). In Primerica's case, sales reps are responsible for recruiting new applicants. 


Most of the company's 91,000 reps work part time, but 4,000 have reached the level of regional vice president, which entitles the worker to higher pay and bonuses, the filing notes.


"I think they want you to make it, but they know you're not going to," Phillip Bowers, who left the company this year and never made more than $50,000, told Businessweek. "People would get into the business, bring their friends, and then after a while, the person who brought those friends would quit."


Primerica's website is full of hype, billing its structure as providing "freedom from a boss" and the "freedom to dream big." It also promotes success stories, such as Brant and Adiris Vogt, who earned more than $100,000 and received a "power builder ring."


That sounds great, until you notice the small print at the bottom of the page. It cautions that the average pay for a sales rep is just $5,513 per year. 


Follow Aimee Picchi on Twitter at @aimeepicchi.


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58Comments
Jun 26, 2013 6:17PM
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Hmm. 80% percent never took their test. Who's fault is that? It was their choice. People should take ownership and quit blaming other people for not making good decisions.
Jun 27, 2013 12:10PM
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The 80-20 rule is the norm for sales positions. The $5500.00 annual income is probably high for the insurance industry. The $99 dollar fee to help get your license is very generous. Would you like to train someone for a month for $99 dollars?

I don't work for Primerica, but I have 30 years in the recruiting and training of sales people.

My question would be why single out Primerica. In all sales positions " opportunity " become a pitfall to the 80% falling, especially in the insurance industry. It is, however, very rewarding to those that don't fall into the pit.

Jun 26, 2013 5:52PM
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I guess I am one of the "fortunate few" who made the ranks of Regional Vice President and am a $100,000 earner. As with any business you have to work hard; the more people you help the more money you can make. Unfortunately with a job you have ceilings and limitations on you. I made a $100,000 income by selling instead of building a distribution system. Now I'm trying to help others achieve what I have done. I agree that people quit but people quit on lots of things. It is hard studying and then passing both insurance and securities exams. Most people give up before they ever get started. In our state it would cost about $300 just to take a prelicensing insurance class; and for $99 Primerica will even pay for your securities courses and exams once you get life licensed. (Oh by the way you can not get paid without a license.)  

And let's not forget the many clients I have helped become properly protected, debt free and financially independent. Yes it is hard work but the rewards are worth it.

Jun 28, 2013 9:51AM
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It is so easy to bash something without looking at the whole picture.  Yes it's $99.  Do you get an online study course and additional assistance to help you pass your exam...yes.  Do they take it for you?  NO!!!

As far as the turnover rate well....name me any successful sales organization that does not have a high turnover rate.  Furthermore,  you can explore other industries as well. Retail, customer service, advertising, it's not just one company. Primerica get's a bad wrap.  I will say this, if this company is so bad then why does the insurance industry, federal regulators, NYSE, and whoever else allow them to continue doing business? 

I have worked for large corporations for over 22 years.  I have seen many people come and go.  Expecting to be able to retire and enjoy life because they bought the company's line.  Only to be working multiple jobs in retirement trying to survive.  How right is that?  How fair is that?  I have also seen the tragedy we call downsizing and how that effects lives.  People who have given and sacrificed for 25-30 years for an idea, a brand only to be told your services are no longer needed.  How those families have to start over because they believed in the dream of a good job being good security.  Explore these facts...

Back to Primerica....The fact is they DO have greenies in the world of financial services. They are set up as a MLM.  They also have people who don't take their exam or fail the first time never to take it again. What I see is someone getting a shot. I would rather have a shot and miss then to never shot at all.  So if Primerica is creating an even playing field where I can help other people and change the lives of my family and friends then what's the problem? 

I looked them up.  I also looked up several other financial services companies. I would love to see someone do a true comparison.  I did... I'm turning in my $99!!!!!!!!!!!!

Jul 1, 2013 4:01PM
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I'm not a Primerica member. But, I have to say this is a supreme waste of time. Why don't you compare the current state for college students in the same way? How many sign up for college, sign the initial loans and stop before they ever get going? I promise you they owe much more than $99. What about those who go a year or two and drop out? they all owe thousands, many ruin their credit, most can't return to another school unless they pay cash. A large percentage can't leverage the credits they've accrued because they can't afford to pay off the old school and attend a new one. Even those who "make it" aren't really successful. But that's OK? Wow. We have a systemic problem in this country where we haven't reconciled the shifts in opportunities with the realities of what we're asking people to do to participate in those opportunities. By the way, investing $99 to make, on average, $5,513 per year isn't a bad deal at all.

Jun 26, 2013 2:46PM
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It seems to me that any sales-related job opportunity is going to have very high turnover and failure rates.  Most people can't deal with the constant rejection involved in sales.  Also, it doesn't seem like $99 is some sort of exorbitant amount.  I'm sure they could easily charge $500 and still get a large pool of people with dreams of easy money.  Sales is tough.
Jul 3, 2013 11:59PM
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Aimee, are you a REAL journalist....like the ones that take the journalist creed to heart in stating the facts?. You clearly wrote this as a dig against Primerica but would you write such a piece on AFLAC or dozens of other top insurance/brokerage companies who charge their newest recruits/new hires A LOT more than $99 in licensing fees?  Do you have a clue as to how financial services companies are structured?  Obviously you don't....maybe you should interview Ron Baron or The CEO of Warburg Pincus as they probably did some unbiased, fact checking on Primerica before investing hundreds of millions of dollars into our IPO in 2010, something you didn't! 
Oct 26, 2013 9:32AM
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Is it primerica's fault that 80% drop out without getting licensed?  Phillip Bowers might just be lazy or a terrible leader, or any number of things.  Primerica paid me while I was in Afghanistan serving a 12 month tour for the army. Also just gave $15,000 in stock. I hate articles that focus on the quitters.
Aug 22, 2013 8:46PM
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I have worked with 100s of Families in the Nebraska and Iowa area and half before i meet them did not have any coverage. The other half had only 1 policy per person and usually a variable universal option 1 that would lapse in ten years and most had a 15 yr surrender charge if there was any money in there. 

My average client buys a custom term plan, with a 35 yr base plan, which for most people is their whole life. I just replaced a policy today that had a 19 year surrender charge, starting at $2.900 on a 60,000 face amount that even with the "assumed" returns would run out and kill itself in 20 years. I gave them a twenty year term for 200,000 for the exact same price and added a rider for his wife. Now he is taken care of. His agent, like most of your colleagues, sold him what was best for the agent not the client. 

Now, that I gave you some education, now here's a little more, every consumer advocate tells people to buy term. Suze Orman, Dave Ramsey, Smart Money Magazine, The Post Gazette, Motley Fool, US News and World Report. The only people that advocate whole life are old agents and DOIs which are run by old agents. 
Jan 15, 2014 10:12AM
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I just started with Primerica about 3 months ago and I've already been promoted AND recognized at the leadership event. I have my life insurance license and working on my series 6 license right now. The people who have not been successful with Primerica didn't try hard enough or they thought it was going to be easy and got disappointed when they found out it was a tough business. The only thing Primerica has promised me is that if I'm willing to put in the work then I would be successful. And as of right now, my hard work is paying off. They have reimbursed me for money I had to pay like the fingerprinting and things like that and people in my base shop has won FREE company trips to Puerto Rico and Hawaii. They have also won the Power Builders Ring in which I witnessed at the leadership event. So.. I don't understand why people are bashing this company. I am looking forward to being promoted to RVP within the next 12 months. Stop blaming the company for YOUR failure just because everyone else is making more money than you -_-
Nov 10, 2013 11:33PM
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Im glad there are still fools like you guys out there who dont have a clue of what primerica really does, this company has changed my life and my children future, you think we are third rate and we just think your ignorent, as long as i possibly canWill continue to replace all the crap sold by all other agents who are just after huge commissions no mater the damage the do! Freedom lives here!
Feb 10, 2014 11:59PM
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As you know the customer needs to feel secure for any financial product to work for them. If they don't stick to a strategy it won't work. Having high cash value plans over long term may be the piece of mind you need. It just comes at a cost that some aren't willing to pay when they figure out dividends are a partial return of premium and are tax free because they rarely more than total premiums Paid. (see page 24 IRS 1040 TIPS on dividends) The cash value does grow and makes up a portion of the death benefit should they client Pass. So the company actually pays less in death benefit each year the cash value grows. This may be perfectly acceptable for some but others may choose to buy a TERM life for 35yrs and pay a little more for the term because it is renewable term to age 95. Take the difference of the premium you would have paid and place it into a diversified ROTH IRA and I think most advisors will agree the ROTH has in the past and will probably in the future out perform a cash value plan.
Feb 11, 2014 12:22AM
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Recruiting is a screening process and some financial companies hide their ratios better than others.
Just remember the well featured movie "Pursuit of Happiness". Do you remember the testing and the work quotas that needed to be achieved by the recruit for the firm, in order to be considered for a position? Do you remember how many recruits they had in the room making cold calls or calling leads? Financial services is not for everyone but no company will ever know who will be the right people until they are given a chance. Primerica just gives more people a chance than any other firm which accounts for it high publicly disclosed turnover. Aimee Picche is in marketing and she wants as many hits on this marketing story as possible. So she finds the story she knows will offend 95,000 people and runs with it without knowing any business facts. Just keep watching the real financial indicators and the professional analyst about PRI. After all people are often wrong about good business models. Bottled water! Fast food Hamburgers! $5.00 Venta Coffee!
I think you get the point.
Mar 20, 2014 12:24AM
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This is what is wrong with our Country!  We have turned into a bunch of socialistic pansies...always wanting everyone to get a ribbon at the end of the Race... That isn't LIFE...PRIMERICA is no different then the NFL less a 1% actually ever make money playing the game.  I started my PRI business out of the back seat of my car in 2009 with the closest office over hr away...I paid $99 like everyone else, but the difference I separated myself from the 80% that don't make it. I've been paid over 500k since I've started...Btw I played major collegiate football in the SEC and Guess what...? People quit, People sit the Bench, People played sparingly, people started, and people were ALL-Americans....(Capitalism)
Not everyone is going win at Primerica because its tough, its a process that most can't go through...But that is what makes it worth doing! 
You Pay nothing to go to PeeWee Football Games...Because if you can Fog a mirror you can be a coach, player, ref, and anything else you can Volunteer for.
if you go the a NFL game you pay hundreds maybe thousands...Why you Ask? Because they are the best of the best...Crazy thought right? 
I turned turned my one bedroom apartment into 3,500 sqft home, debt free, and have helped over 2,000 personal clients without making a cold call or knocking on some strangers door. 
I've set down with a widows that had no idea what to do...I've paid death claims...I've taught a single mothers how to make extra money helping people...I Guess what I'm trying to say is that Primerica has changed my life and many others...Do I think that people in our business sometimes mislead people? YES i do, but they don't stay around long...You want to know about us talk to the 4,000(RVP's) not the guy still trying figure out how to put his pads in his pants!
Feb 27, 2014 9:23AM
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Every person that joins Primerica is an Independent Representative, meaning they don't have a boss, but they will have to bring the drive to be their own boss, the company does not hold anyone accountable to quotas which is a primary characteristic of any sales organization, only individuals that truly apply themselves to take advantage of the franchise like system that Primerica offers for only $99.00 which by the way is not a join fee but a background check fee and tools for the licensing procedure, and yes you need a license and is regulated by Government Agencies, And for many that come into the company and put the effort to learn what the company teaches and for some reason they don't believe they want to pursue it a s a career, they come out knowing and having the tools that they need to succeed managing their money, the Financial Education ( Which by the way is not taught in schools) is priceless and that is the Companies Mission to help people not become dependent on programs or systems to become financially sound but to have "How to's" of money management and who in the world does not want that?
Feb 20, 2014 11:36AM
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I am being asked to be one of their agents now.  I just don't like that they sell loaded funds. I mean its 2014 now. There is absolutely NO reason at all to by loaded funds. What a shame. 
Jun 27, 2013 2:50PM
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Network marketing works best when you have a basic, consumable product with unique characteristics combined with catching the timing through early entry into the business. The marketing of financial services and products are best left to professionals as the improper application of either can have significant negative ramifications for consumers.
Nov 11, 2013 4:25PM
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Price comparisons
58 yr woman 10 year preferred 50,000 Fidelity $20.04 Primerica $44.89
41 yr male 20 year $500,000 Banner Life Insurance $70.44 Primerica 88.83
41 yr female 20 year $500,000 Banner Life Insurance $58.63 Primerica 88.83
33 yr male 20 year 250,000 Banner Life Insurance 24.50 Primerica 35.86
And like we will agree 90% of the time term is the right product but what about the other 10%? What happens if 15 years later things change and permanent is right do you say sorry?
Also most of the RVP's at Pri don't own their business.
Pri commissions are very very low, most Pri reps don't know that because they have never looked around.
Most PRI reps get no trails on investment income so most of PRI clients are not serviced. Just sold product and left alone. Looks bad on the whole industry.
Nov 11, 2013 4:16PM
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Approx 7 million 500,000 thousand people have been recruited into Pri in 36 years. So currently about 2800 make over 36,000 a year which equals .00037% of a chance to make over 36,000. Even if all current reps 94,000 made over 36,000 that is a success rate of .0125% so if you think those are good odds I do not want you as my financial advisor!!
Jun 26, 2013 3:26PM
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They are a giant pyramid scheme who prey on people.  I was contacted by one of their people over 10 years ago.  They didn't know me, they called because I was a local sales person (for a telecom company).  I never expressed a desire to go into financial planning.  The guy was a good sales person and I showed up to check things out. I never did pay anything but I did look into it.  I sat through one of their meetings and trainings for their insurance classes.  Anyway, the more I heard the more I realized it is a pyramid scheme and not for me.  I have a child to raise and wanted dependable income. 

 

They just seemed shady to me.  They also didn't seem to put much into educating its sales reps.  They would just get licensed and throw to give advice to people without really knowing much.  They would use the financial planning software that is similar to what you can come up with on your own.  They sell it as something you can do in your free time to make an extra buck while working another job (sort of like selling Avon, Candles, etc.).  The difference is, candles or cosmetics will only set you back a little.  If someone takes all of your money and screws that up, it could be your whole life savings down the drain.  They prey on those who do not know better.  Those people give them whatever little bit they have to these sales reps who really do not know that much more themselves.  Who cares if I pay a little more for makeup and candles for a night with the ladies.  I do however care if I were to give someone who isn't that knowledgeable my life savings.  When I was approached by them, I was young (early to mid twenties) and didn't know better.  I didn't know what credentials and experience to look for.  I just had a gut feeling something wasn't right.

Before you think I'm being unreasonable and picking on anyone, I do have some experience in the matter (now). I've been working in the financial industry for almost 10 years now.  So, I have been enlightened.  Even now, I would still not feel comfortable playing with people's money.  I would be terrified to lose their life savings so I am in an administrative role.  I leave the investing to more experienced people.  So, they did do something good as in they made me more interested in that industry.  I was in technology sales before this.  However, it did enlighten me to all of those people out there who know nothing about investing yet take money every day and pretend like they do.  So many people in the industry don't even know the tax laws and rules.  Granted we are not to give advice (that is for a CPA or other tax advisor), we are still supposed to know general rules or how things work.

Ugh...anyway, my advice is to check and double check references, experience, credentials and more before giving anyone your money.

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