The insurance industry is no stranger to the concept of network marketing. Very often, agents and brokerages recruit other agents, provide them with some marketing support, and offer them training. Then the recruiters get paid back for their investment by earning commissions based upon the performance of those agents under them.
At first glance, Primerica looks like it has the same structure as many insurance companies and brokerages. Still, most insurance industry professionals don’t view themselves as network marketers unless they’re involved with such obvious examples as the Primerica MLM. Find out how Primerica Multi-Level-Marketing works and if it provides a good opportunity to grow your career.
Is Primerica Legit?
The fact that Primerica stands out when compared to other MLMs or insurance providers doesn’t mean that there’s a Primerica scam. Legally, Primerica is a legit corporation. They do offer legal financial products and are even publicly traded on the stock exchange. Some of their agents end up doing very well in their careers by helping clients with such needs as life, long-term-care, and car insurance and of course, by recruiting and mentoring other successful agents.
They also offer a broad range of insurance and financial products, so you have multiple offerings for clients. Once you turn a prospect into a client for one financial product or service, you have the chance to help them with plenty of other financial needs. For instance, you might approach a client with a modestly price term life policy and then retain them by providing them with debt consolidation, investments, or annuities.
This is a quick snapshot of Primerica as a whole:
- Founded in 1977, Primerica has over 120,000 licensed agents in the United States and Canada.
- Over 20,000 of these representatives have a Series 6 license to handle brokerage accounts.
- The company serves about 4.3 million life insurance policy owners, two million investment accounts, and more.
So, it’s fair to judge Primerica as legit and not a scam. That doesn’t mean this insurance organization offers the best opportunity for you personally. Dig a bit deeper into how the Primerica compensation plan works and how the company works to help their representatives earn an income.
An Overview of the Primerica Compensation Plan
The Primerica compensation plan is a little more complex than many MLMs because they offer many different kinds of products. For instance, as even a newly licensed agent, you can market life insurance, pre-paid legal services, debt consolidation, and more. You can also earn a brokerage license and offer investment accounts. As a note, you will need to earn an insurance license in your state to begin working with the Primerica MLM and offer their core products to clients.
Since the company tends to market term life insurance as one of their core products, it’s probably fair to start with that as an example.
Like many life insurance providers, you earn a higher commission on your first-year sales. They also offer advances of the entire first-year commission, so if you make a sale, you can get compensated for 75 percent of the entire year’s premiums at once, even if the customer opts for monthly automatic payments. Also, the higher up you move in the organization, the more you will earn on your own sales.
For this example, assume your direct clients pays a $50 monthly premium, resulting in a $600 yearly premium:
At first glance, you might think it’s a pretty good deal to sell a policy for $50 a month and earn over $100 in income. You should note that this advance is really a loan until your client actually pays the entire premium for the year. If the client ends up terminating their policy before the end of the year, you may end up owing money back or having that taken out of your next advance.
That’s why Primerica and most other insurers will check your credit before they approve you as an agent. You should at least have fair credit to work for them.
Primerica Override Commissions
As with other MLMs, you should note that higher levels get overrides. Basically, the override will amount to the difference between the direct commission percentage and the sponsor’s commission for their own direct sales. For example, let’s say you reach the District Leader level and recruit a new representative. If that agent makes a sale, he or she gets 25 percent, and you get the other 25 percent.
If your recruit ends up also moving to District Leader, you will lose the chance to earn from their commissions. While Primerica encourages mentoring and recruiting, you can’t really rest on your laurels and always need to bring in recruits at lower levels.
Primerica Compensation Plan Examples for Other Products
Primerica offers a lot of financial products. To keep this brief, let’s look at mortgages and investment accounts.
Let’s say that your client gets a $200,000 mortgage from you when you’re at the Representative level. At that level, you have a commission capped at .312 percent. That means you earn $624, which isn’t really a competitive commission for that size of a mortgage loan. Again, your District supervisor will earn the same, so you can see how Primerica encourages recruiting and mentoring.
If you helped your client invest $5,000 in an investment account. The provider gets 4.5 percent, and say your commission is 30 percent of that, or about $67.50. If your client only invests the minimum of $25 a month, you’ll only earn pennies, though you will earn that commission for the lifetime of the account. At the lower levels, you would need to encourage a lot of investments to even make the minimum payout of $25 a month.
Cost to Join Primerica
To join, you pay $99 a year. You also pay $25 a year for their online support system. This gives you a website you can use to help market products. You may also login to this system to see your sales, income, downline, and so on. Be aware that even though you get a website with marketing materials, Primerica has strict rules about the kinds of online marketing that you can do.
Now all insurance companies have compliance rules to keep them out of trouble with government regulators, but Primerica may be stricter than most in that regard because they’re not really an online insurance company. If you’re interested in marketing online, particularly insurance marketing, Primerica may not offer the best opportunity for you.
Is Primerica Multi-Level Marketing a Good Business for You?
Again, many life insurance brokerages and companies offer an advance system like Primerica does, so it’s not unusual. Still, when compared to the first-year commissions you can get from other brokerages or directly from insurance companies even as a new agent, 25 percent is low for term life insurance. You can start out with the the higher commission that Primerica only reserves for its upper levels.
At only 25 or even 25 percent for term life, you need to sell a lot of policies to make a living. That’s true even if everybody keeps their policies, so you never need to pay back an advance.
Of course, Primerica uses term life to get an agent’s foot in the door. The real plan is to have clients also rely upon you for other financial services.
If you can also market car insurance, annuities, and other products, your satisfied clients may also turn to you for other products.
The rest of the commission for any financial products you sell goes to the levels above you, so obviously Primerica emphasizes recruiting for anybody who wants to earn a good living.
That way, you earn for your own sales and for the sales of your recruits and in turn, their recruits. On the other hand, if your recruits do too well and move to levels above you, might not even get an override for them any longer.
Their system also advises new agents to begin with their warm market. In other words, they want you to offer products to your family and friends.
If you’re not comfortable with that strategy, then you might decide you should look for another opportunity.
At some point, you will run out of people in your social circle, maybe even faster if you’re always trying to sell them something.
What is the Alternative to MLM?
Look, I don’t think you want to spend all day selling insurance policies, because neither do I.
Personally, I found running your own business to be a lot more fun than selling insurance policies for someone else’s company.
So how do you quickly start a 6-figure recession-proof business in 2020?
You just need to learn these 2 skills:
1. Make a Businesses’ Phone “Ring” AKA Generate Leads with Simple Ads
2. Create a “Client-Getting-Machine” so you can do the exact same thing for other clients without adding hours of work…
when you invest your time and effort into just those 2 skills…
…you’re literally learning how to write your own checks.
Any business venture you start is going to take:
- Consistent amounts of work for weeks and months on end
- Dedication to not giving up
- Sacrificing going out on the weekends to get ahead in your business
- Putting yourself out there in front of businesses and people to earn money
If you are ready for that commitment, this is the best option to make money online I feel is worth it in 2020 and going forward.