This is where your finance takes place

Following unto Michael’s response about my Primerica Series, here is a repost of his comment on my blog. I think it deserved full attention of my readers. Once again, thank you Michael for letting us know about your side of the coin.

I have responded once before and wanted to take this opportunity to share some history about the Primerica phenomenon.

When Primerica first emerged, it was under a different name….it was called A.L. Williams. Art Williams, a high school coach, began selling TERM Insurance and MUTUAL FUNDS.

His logic was simple:

(1) Whole Life Insurance is simply a bundled product, composed of a decreasing term policy linked to a savings component I will refer to Whole Life and its cousins now as CASH VALUE POLICIES

(2) Cash Value Policies, on a cost per thousand, are much more expensive than Term Inisurance

(3) Cash Value Policies are difficult to understand and most traditional life insurance agents cannot tell you how much of your premium dollars go the the life insurance component and how much goes to the savings component. Remember, MOST Life Insurance agents were NOT college educated in finance and economics. What they learned about insurance they learned from the Insurance Company that hired them

(4) The rate of return on the savings component is extremely low. According to a Federal Trade Commission study conducted in the 1970s, the rate of return was less than 2 percent!

(5) In most cases, when a person who owns Whole Life dies, his beneficiaries receive only the face amount of the policy, NOT the savings!!

(6) If you take out the savings while the policy is in force, you either have to borrow the money (that’s cute…you borrow your own money) or if you take out all the savings, the insurance company reserves the right to cancel your policy. You don’t have to believe me, just READ the policy and examine its provisions.

(7) His conclusion?

Have people purchase TERM insurance so that they could afford adequate coverage

Have people invest in mutual funds to satisfy their retirement needs because historically they have provided a much higher return than insurance policies.

As another advantage, IF the policy owner dies, his family receive his insurance AND investments.

He called this concept “Buy Term and Invest the Difference!” The concept had actually been around for a long time. Art Williams simply adopted it and put it into practice.

How did the life insurance industry react? Attack after attack after attack. The little dirty secret was out. Primerica revealed that the industry was focused on selling its most expensive product (Whole Life) to make profits rather than to provide benefits to its policy owners. Sure, they could sell term, but they instead pushed whole life policies as “investments.” But Primerica kept forging ahead. As more and more people became financially literate, they began to question the practices of the once revered insurance companies. The people began to act.

In the 1990s several of the industry’s top companies were facing class action suits for parading Life Insurance as an investment. Prudential, MetLife, and many others were stung and forced to pay liabilities to customers.

The industry never forgot Primerica and continued to attack her with a vengeance. The company was excoriated and its representatives impugned. Rumor and innuendo about Primerica was rampant. The way we were protrayed you would have thought that behind each of our names were the numbers, 666!

As Primerica grew, so did the logic and wisdom of its message. But Term Insurance and invest in mutual funds! Now most financial planners worth their salt parrot the same mantra, as do respected magazines such as Consumer Reports, Forbes, Money, and many others. The revolution Primerica launched continues to evolve today. And that is good for the average Joe out there.

Having witnessed attacks against Primerica for fifteen years, I realize there will always be detractors out there and that we will never reach them. I do wonder, however, why you don’t see the same against the so-called traditional insurance companies. It leads me to believe that most of the posts and complaints I have read over the last decade and a half come not from John Q. Citizen, but traditional life insurance agents and their proxies.
Much of the rest come from people who embrace every conspiracy they hear and simply repeat what they read….

Primerica is a MLM company
Primerica is a pyramid scheme
The representative who work for Primerica are evil and ignorant, they don’t know what they are selling
The representatives are not “professional”
Primerica is about to go bankrupt

Goodness, the list goes on for infinity. Despite all this tired diatribe, Primerica continues to be the largest and most successful marketing company on earth.

Let me pose a question to you as an average Joe. The large insurance companies can sell Term just like us. Why do you suppose they opt to sell you their most expensive product (Whole Life)? You got it. To make more money.

Now the follow up question. If the agent sold you his most expensive product, did he do it to benefit your family, or his?

Your ponder those questions and think with logic rather than emotion. As for the life insurance agents, I really don’t care about your opinions. I have sat across the table with whole life agents with clients to debate which type of insurance is best for the client. Wanna guess who won?

I am not an arrogant snob. I am open to different perspectives and understand that NO company is perfect. By the way, NO client is perfect either.

But, I have met a lot of arrogant life insurance agents working for the major firms who spend more time on the golf course while their underpaid secretaries do the work than they do in front of families.

We at Primerica make a heck of a lot less on an insurance commission than the traditional whole life guy. But we are eager to help people and will visit them multiple times to satisfy them and provide the most professional advice we can offer. We don’t have secretaries, we don’t demand you come to our office, we don’t wear costumes (starched shirts and $80.00 ties) to impress you with how we dress.

What we do is offer you, free of charge, the most important thing a person has, and that is his time. AS for our expertise, we have the same credentials that the other guys have, and probably a lot more.

Those of us who have been around for awhile are seasoned, well trained and extremely motivated. We truly enjoy seeing people improve their lives and stick to the old creed, “Give people what they want and you will get what you want.”

Thank you for your time,

Mike

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