With so many different financial service companies around you may be wondering are they all legit. As covered in a recent article on the World Financial Group scam, I showed how this company was a legit and a real financial company. However the same is said about other financial companies and in this article I going to cover another company that has gotten a bad rap as being claimed as a big scam, Primerica.
Who Is Primerica
Primerica is a financial services company that coined the phase buy term and invest the difference. They are located in Atlanta Georgia and are the largest financial services company in the United States.
This company was founded in 1977 and has been a leader in helping people cut down high insurance cost and invest that money to work harder for them. On top of that they also offer a business opportunity that is nearly second to none. So you might be wonder with a company this great how could they possibly have ever been labeled as a scam?
What Primerica Does
Primerica has one business philosophy, and that is to help people cut down their cost by shifting them into a term life insurance policy and helping them cash out their costly whole life or universal policy.
Permanent policies will usually carry much higher premiums as a result and by switching to a term policy you’ll be able to cut down the cost of the monthly premium and invest the money that was in the cash value of your life insurance policy to a more suitable location like a Roth IRA or mutual fund.
This is obviously an easy way to cut down the cost in the long run but it can be a costly one if you’re not careful. One thing to watch out for when cashing a permanent policy in is the surrender period. For example, a variable universal life insurance policy will usually have a 10 year surrender period on it typically. If you cash the policy out before the surrender period ends you could end up paying a large sum of money to the insurance company depending when you close the account.
Another issue I’ve seen happen was were a client of mine had previously worked with a Primerica agent and the agent closed out their permanent policy and helped them set up a term life policy but in the end never followed through and helped them invest the money properly and the couple ended up spending all the money on a new car.
In the end Primerica is a legit and real company but just because someone is in financial services doesn’t mean they know what they’re doing. You have to take the time to research and understand all of your options before switch or it could end up costing you big.
I agree with this. You have to research and understand what your options are, or it could be costly. I’ve heard of Primerica and mostly what I’ve heard about them has been bad. Your post sheded some light on what they do. Good post!
I have to disagree with your assessment of Primerica as a Fraud. You stated am anecdote about a client who had an agent who didn’t follow through properly. Quite frankly, I think that it is unfair of you to condemn the parent organization for the failure of one of it’s representatives. As to surrender charges, all Whole, Universal and any type of hybrid of them carry a surrender charge – think of it as a bank that overcharges you for a product, keeps the overcharge and then charges you to get it back. You are correct in stating that it will cost you money to cancel your policy and take the cash our if you are in the surrender period (some of which run well beyond 10 years) – but if the money isn’t yours to begin with (remember – if you die, you don’t get ANY of it back, all that your beneficiary gets is the face value of the insurance policy if yours is a standard, Whole Life policy).
I have, obviously, had a good relationship with Primerica and think that your rating it as a scam is a bit radical.