Is Primerica a pyramid scheme?
This insurance and financial services provider straddles the line between being a multi-level marketing company and a pyramid scheme. However, I believe it falls short of meeting the criteria for a pyramid scheme for a few reasons.
The company indeed places a high emphasis on recruiting new agents, provides little training, and offers minimal compensation. Despite this, Primerica does offer genuine products and services.
You could sign up to become a Primerica agent if you want to try your hand at being an insurance agent. However, you could make much more money working at a different insurance company.
I have put together information on Primerica from reliable sources and have included my personal experience with the company in this guide.
My goal is to help you learn how this company works, what its recruitment process is like, how it compensates agents, and whether this income idea is the right fit for you.
This report is written by a former Primerica agent and supplemented with additional research from Incomepedia Editorial Team.
Table of Contents
My Personal Experience
I first heard about Primerica in mid-2021 after being approached by an acquaintance who turned out to be a Primerica recruiter. He talked about the company’s various financial services, such as managed investments in mutual funds, debt management plans, and credit monitoring. However, he was especially passionate about pushing the company’s Term Life Insurance.
He pointed out how millions of American families are left with hefty medical bills following the primary breadwinner’s passing. Such families often go into debt that lasts years or even decades.
He promoted Primerica Term Life Insurance as the perfect solution for this problem. I had a passing understanding of different life insurance plans at the time. However, I didn’t think I would need such insurance in the future.
I told him I wasn’t married and that I wasn’t planning to have children in the future. Therefore, a Term Life Insurance plan wouldn’t be useful for me. He then attempted to promote Primerica’s other services. However, I didn’t show much interest in them either.
The agent then changed his tone and asked if I was interested in becoming a Primerica agent. The offer initially caught me by surprise. I told him I wasn’t interested because I was satisfied with my current role as a freelance graphic designer.
He pointed out that he had a day job as a bus driver and that he worked part-time as a Primerica Agent. He talked about how it helped him make extra cash and that he could work whenever he wanted to.
I did enjoy the freedom of having flexible work hours as a professional freelancer. It was actually one of the reasons why I avoided getting a sales-oriented job. However, I was always curious about what it would be like to work as a sales agent.
I told the agent I didn’t have any education or experience relevant to such a role. He assured me I wouldn’t need any qualifications to get started as a Primerica agent. He talked about how the company trains new recruits and gets them ready to promote their services to prospective clients.
He also offered a brief overview of the company’s compensation structure and how you could earn money in multiple ways.
Now, my job as a freelancer did have its ups and downs. The demand for my services typically slumped any different times of the year. Having a flexible income source didn’t seem like a bad idea.
I decided to give it a shot and signed up as a Primerica agent. I filled out an Independent Business Application (IBA) and paid a $99 sign-up fee. I then underwent thirty days of training with the company.
This ended with an exam, after which I received an insurance license. I was then left on my own to promote Primerica’s services.
I worked part-time as a Primerica agent for a total of six months before quitting. I learned a lot about sales tactics during this time. However, I quickly grew bored with promoting the same Term Life Insurance to each prospective client. The company encouraged me to promote this plan because it was their signature offering.
I didn’t feel very enthusiastic about pushing an insurance plan with many better alternatives out there. The company also encouraged me to recruit new agents with the promise of additional compensation. However, I preferred to focus on sales duties over recruitment.
I earned approximately $2,000 in commissions in five months before calling it quits. This amount was astonishingly low, given the amount of time I spent promoting Primerica.
I wouldn’t recommend Primerica to people who intend to become professional insurance agents. The training I received felt basic, and we were taught to follow a narrow set of strategies.
I had some success pitching their Term Life Insurance to a small number of people. However, these clients were generally undereducated individuals with a limited understanding of the insurance world.
After a while, it felt wrong to push Primerica’s insurance onto such people. This was because there are plenty of more-affordable insurance plans out there.
Primerica wasn’t the dream part-time gig I was expecting it to be. I earned only $2,000 in five months after spending hundreds of hours approaching potential customers. I wouldn’t recommend this income idea to anyone who intends to make a lot of money.
My experience above should serve as a warning for most people. However, I also want to discuss the company, its services, recruitment practices, and legal issues to help you make a more informed decision about signing up as an Agent. So join me as I dive into Primerica and determine whether it is a good income-generation method.
What is Primerica
Primerica is an American financial services company that is based in Duluth, Georgia. It was initially part of Citigroup before being spun off following a public offering in 2010.
Primerica has built up a reputation as one of the largest multi-level marketing companies to offer insurance and financial services. It promotes Term Life Insurance using the slogan, “Buy Term and Invest the Difference”.
This refers to the idea of buying Term insurance and using the money you would have spent on permanent life insurance towards investments elsewhere.
Primerica’s agents often use this slogan to target undereducated middle-class families with limited financial knowledge. This approach has been extremely successful given that the company’s annual revenue is over $2 billion.
Primerica’s Insurance and Financial Services
The company is best known for offering Term Life Insurance. This plan offers coverage for a limited period between 10 and 30 years. If the policyholder passes away during this period, their beneficiaries will receive a payout.
Primerica also offers a range of financial services. This includes:
- Financial Needs Analysis
- Term Life Insurance:
- Investments
- Auto & Homeowners Insurance
- Long-Term Care Insurance
- Debt Management Plans
- Credit Monitoring
Many of the above financial services are repackaged services from other vendors. Despite this, the company has been successful in getting clients to sign up for these services.
History
In 1977, A. L. Williams, his wife Angela, and 85 other individuals founded an insurance company called A.L. Williams & Associates. The company devised the now-famous “Buy Term and Invest the Difference” slogan.
A. L. Williams & Associates entered into a contract with Massachusetts Indemnity and Life Insurance Company (MILICO) in 1980. The company then established First American National Corporation to hold First American National Securities and First American Life Insurance.
A. L Williams & Associates was renamed The A. L. Williams Corporation. First American National Securities and First American Life Insurance were renamed to PFS Investments and A. L. Williams Life Insurance Company respective.
The companies underwent many changes and mergers throughout the 1980s and adopted the name Primerica Corporation in 1987.
Primerica began offering financial services in 1993 after acquiring Travelers Insurance Corporation and becoming part of Travelers Group. It reported $1.65 billion in net sales in 1998.
Travelers Group merged with Citicorp and formed Citigroup in 1998. Citigroup then attempted to sell Primerica in 2008 after receiving multiple bids.
Citigroup chose to spin off Primerica in 2009 and sold its equity stake in 2011.
You can learn more about Primerica’s origin from its founder in the following video:
CEO and Staff
Glenn J. Williams is currently Primerica’s CEO. He previously served as the insurance company’s President before being voted in as CEO in 2015. Williams played a crucial role in helping Primerica expand in Canada between 1985 and 2000.
Peter Schneider is Primerica’s President. He was the company’s Chief Administrative Officer and Executive Vice President before being promoted in 2015.
A.L. Williams sold his company to the Primerica Corporation in 1989 and briefly served as an advisor. He no longer has any involvement with the company.
According to Primerica’s LinkedIn page, the financial services company has over 2,000 corporate employees. They have also stated they have 129,000 agents around the globe.
Is Primerica a Pyramid Scheme?
You might be wondering if Primerica is a pyramid scheme. To answer this, we need to review the legal definition of a pyramid scheme.
According to the Securities and Exchange Commission, a pyramid scheme is:
“an investment fraud in which new participants’ fees are typically used to pay money to existing participants for recruiting new consultants.”
SEC describes pyramid schemes as having the following traits:
- No genuine products or services are sold
- Members are promised high returns in a short period of time
- Members are told the business model allows them to make easy money or passive income
- There is no demonstrable revenue generated from retail sales
- Members must make a purchase to sign-up
- The business has a complex commission structure
- The business model places a high emphasis on recruiting
Why Primerica Isn’t a Pyramid Scheme?
Primerica is a multi-level marketing scheme. I wouldn’t refer to it as a pyramid scheme because it doesn’t have each of the traits mentioned above. This includes:
#1. No Genuine Products or Services are Sold.
Primerica provides many financial services in addition to its life insurance plans. Millions of people around the world have signed up for Primerica’s insurance plans or have used their financial services at some point.
The company was also part of Citigroup, which supports the notion that they offer legitimate services.
#2. Members are Promised High Returns in a Short Period of Time.
Primerica does not promise high returns for agents. The company has publicly disclosed that its agents earned an average of $8,410 in commissions in 2021. This is not considered a high annual earnings amount. However, you should note that the vast majority of Primerica’s agents work only part-time.
#3. Members are Told the Business Model Allows Them to Make Easy Money or Passive Income
Primerica talks about different ways to earn income and how you can use this extra cash to improve your life. This includes:
- Paying down or reducing debts
- Saving for the future
- Offering your children a better life
The company also claims you can become more educated about your finances and make a career change by becoming an agent. None of these points lead you to believe you can make “easy money” or “passive income”.
#4. There is No Demonstrable Revenue Generated from Retail Sales.
Primerica’s financial disclosure shows that the company earned over $2 billion in revenue in 2021. A large portion of these earnings likely came from selling insurance plans and offering financial services.
The company charges a registration fee of $99. Assuming a quarter of their 130,000 agents joined in 2021, the company would have earned around $3.2 million from sign-ups.
The company also charges you $25/month to keep working as a Primerica agent. This means they likely earned around $39 million from agent renewal fees in 2021.
When combined, these fee earnings add up to a total of $42.2 million. This is well below the $2 billion revenue figure Primerica posted for their 2021 earnings. Based on this information, we can conclude that Primerica generates most revenue from sales.
#5. Members Must Make a Purchase to Sign-Up
Primerica stands out from multi-level marketing schemes that sell products because you don’t need to purchase products or hold inventory. As an agent, you will promote the company’s services by finding people to sign up.
#6. The Business Has a Complex Commission Structure
Primerica has a simple commission structure. As an agent, you will earn a fixed percentage from selling Primerica insurance and financial services. You can earn a higher commission percentage once you ascend to higher levels in the company structure.
You can also earn a commission cut from the agents you have recruited. These earnings aren’t difficult to calculate. However, they can be time-consuming to estimate if you have many tiers of agents under you.
Why Do People Think Primerica is a Pyramid Scheme?
Many people believe Primerica is a pyramid scheme. They hold this belief for the following reasons:
Primerica Has a Sign-Up and Membership Fees
Pyramid scheme typically supports itself by taking money from new recruits. The money is typically taken in the form of product purchases. However, many such companies also have sign-up and membership fees.
Primerica charges you $99 to register as an agent. You will also need to pay $25 per month to continue working as a Primerica agent. The $99 registration fee makes sense as it covers training costs and other onboarding procedures. However, the $25 per month fees do make it resemble a pyramid scheme.
The Company Does Not Disclose Much Information About Earnings
If you spend some time browsing Primerica’s website, you might notice that they provide little information about agent earnings. Earlier, I pointed out that agents made an average of $8,410 per year. Other than this figure, it is difficult to learn how much agents make at the company.
The company has an 11-tier hierarchy system. This means a new agent or “associate” can be promoted ten times and gain a chance to earn more money with each promotion. However, you wouldn’t be able to guess your average earnings due to the lack of information the company provides.
The Business Model Encourages Recruitment
Primerica’s business model encourages you to recruit new members if you wish to boost your earnings. They do this by offering you a cut of the commissions your recruits earn.
How Much Money Can You Earn from Primerica?
Fact: Primerica’s agents earned an average of $8,410 in 2021. This information was disclosed in Primerica’s Earnings Statement on their website.
Primerica consultants generally start off as “Associates”. They are promoted to the Representative level once they obtain their license. They can then start selling Primerica’s products and services.
Representatives have a chance to work their way up to higher levels if they meet specific sales and recruitment targets. Agents at higher levels typically receive higher commissions.
Unfortunately, Primerica hasn’t disclosed key information about these levels. This includes information on
- The average earnings for each level
- The percentage of agents at each level
- How long agents typically stay at each level
This lack of available information makes it difficult to determine how much you would likely make as a Primerica agent.
How to Earn Income Through Primerica?
You can make money as a Primerica agent in two primary ways. This includes
- Sales commissions
- Overrides on Downline Insurance
Method #1. Sales Commissions
Primerica agents typically earn a commission percentage from making sales. This includes sales for insurance plans and financial services. The commission percentage for each agent level is described in the following table:
| Level | Title | Commission Percentage |
| 1 | Associate | N/A |
| 2 | Representative | 25% + Potential Bonuses |
| 3 | Senior Representative | 35% + Potential Bonuses |
| 4 | District Leader | 50% + Potential Bonuses |
| 5 | Division Leader | 60% |
| 6 | Region Leader | 70% |
| 7 | Regional Vice President | 110% + Bonuses |
| 8 | Senior Vice President | 110% + Bonuses |
| 9 | National Sales Director | 110% + Bonuses |
| 10 | Senior National Sales Director | 110% + Bonuses |
Method #2. Overrides on Downline Insurance
Primerica agents can also earn commissions from the people they recruited. These are known as “overrides”. The override percentage for each level is described in the following table:
| Level | Title | Overrides Percentage |
| 1 | Associate | N/A |
| 2 | Representative | N/A |
| 3 | Senior Representative | 10% |
| 4 | District Leader | 15% – 25% |
| 5 | Division Leader | 10% – 35% |
| 6 | Region Leader | 10% – 45% |
| 7 | Regional Vice President | 10% – 70% |
Let’s describe how overrides work with a quick example. If you were a Senior Representative who hired a new recruit, you would get a 10% override on their sales. So if they sold $1,000 worth of Primerica products or services, you would receive $100.
You might have noticed that the overrides percentage increases as you move to higher levels. This gives agents an incentive to stay with the company and recruit more members in an effort to increase their earnings.
You can learn more about earning money with Primerica in the following Youtube video:
3 Key Advantages of Becoming a Primerica Agent.
Pro #1. No Need to Purchase Products or Maintain an Inventory
Primerica stands out from other multi-level marketing schemes because it doesn’t require you to purchase products. As an agent, you will promote Primerica’s products and services. You will do this without maintaining an inventory or having to meet a sales target.
Pro #2. Working for a Financially Strong Insurance Company
Primerica has a strong reputation in the insurance world. The company was the second-largest Term Life Insurance provider in North America in 2021. The Better Business Bureau gave Primerica an A+ rating.
Forbes also named Primerica as one of the best American insurance companies in 2022. The company was also formerly part of Citigroup. This gives it high credibility when compared with other multi-level marketing companies.
Pro #3. Training is Included
Primerica’s $99 sign-up fee covers training costs. This means you can learn to become a licensed insurance agent for a minimal fee. You can then apply these skills in other areas, even if you choose to quit Primerica.
3 Key Disadvantages of Becoming a Primerica consultant.
Con #1. The Training is Minimal
The training I underwent at Primerica felt limited. They taught me how to pitch their products and recruit people using a narrow script. This approach might work for some agents. However, I felt it wasn’t helpful if you wanted to compete with professional insurance agents.
The company pushed you to recruit new agents but didn’t help you become a better-quality agent.
Con #2. Overuse of Emotional Buying Tactics
As an agent, I was taught to promote Primerica’s products using emotional buying tactics. I felt guilty using this approach on middle-class families with a limited understanding of finance.
To make matters worse, I knew these families might be better off using insurance plans from other companies. If you can’t stomach the thought of preying on vulnerable families, you might dislike working as a Primerica agent.
Con #3. You Probably Won’t Make Much money
Remember, Primerica agents earned an average of $8,410 in 2021. That comes to around $700 per month.
These earnings could be acceptable if each agent was working part-time. However, each of them likely devoted several dozen hours to sales and recruitment each month.
For example, I made around $500 per month after putting in fifty to sixty hours of work. This means I earned a bit higher than minimum wage for my efforts. However, my wages were well below the $23 to $29 hourly wage that professional insurance agents typically receive.
Major Primerica Controversy
Primerica may have a strong reputation in the financial world. However, that doesn’t mean they haven’t experienced their fair share of legal troubles.
Some of the company’s major lawsuits and controversies include:
Poor Retirement Advice Controversy
Primerica’s brokers were accused of providing clients with poor retirement advice in the late 2000s. The company’s brokers had convinced many people to give up their lifetime pension payments rights. They then asked them to switch to one of Primerica’s plans. These plans subjected the clients’ finances to stock market risks.
To make matters worse, many of these clients followed Primerica brokers’ advice in the mid-2000s. They then suffered huge losses during the 2008 financial crisis.
Many clients filed lawsuits against Primerica for this. However, the insurance company won most of these cases.
Failure to Pay Benefits Controversy
In 2014, a couple filed a lawsuit against Primerica for failing to pay the benefits they were owed. They had purchased a life insurance policy that covered numerous individuals. One of these individuals passed away, but Primerica did not pay the couple the full benefits.
Final Thoughts
You should be able to make an informed decision about joining Primerica as an agent based on the above information. The company isn’t a pyramid scheme, but you also shouldn’t set your expectations too high.
Primerica is a multi-level marketing scheme that has a good reputation in the financial world. However, this doesn’t necessarily make it a good fit for those working as its agents.
I don’t regret my experience with the company. It satisfied my curiosity about working for an insurance agency. However, I do regret spending hundreds of hours promoting products to underinformed individuals with high debt burdens.
Who Would Primerica Be a Good Fit For?
Primerica would be a good fit for someone who wants to learn about the life insurance industry. You can apply what you have learned to make money in different ways. However, you shouldn’t expect to become rich through this income idea.
You might be able to increase your monthly income by working as a part-time Primerica agent. However, you could earn a higher wage rate as a professional insurance agent at other companies.
In my opinion, you should sign up with Primerica to learn about the insurance industry. You should then look for a full-time job at a different insurance agency after building up confidence.
I hope my comprehensive guide has assisted you in learning about Primerica and whether it is the right choice for you.
Frequently Asked Questions
Is Primerica’s Term Life Insurance overpriced?
Primerica’s Term Life Insurance is approximately 11% to 29% more expensive than comparable plans from other insurance companies.
Can You Lose Money as a Primerica Agent?
Primerica charges a $99 sign-up fee and a $25/month renewal fee. You could lose money if your commission does not cover these costs. However, you are unlikely to make a loss if you make at least one sale per month.
How much does it cost to leave Primerica?
Primerica won’t charge you if you choose to leave the company. However, you should tell them before the start of the next month to ensure you don’t get charged the $25 renewal fee.
Sources
- Primerica’s Annual Revenue: Primerica Revenue 2010-2022 | PRI
- Primerica’s Term Life Insurance: Primerica Life Insurance Review
- Primerica’s Founding and History: Primerica History
- Primerica’s CEO and President: Management Team
- Primerica’s Employees and Agents: Primerica Linkedin
- Primerica Agents’ Average Earnings: Important Earnings Statement
- Primerica Easy Earnings Claims: Business Opportunities
- Primerica Revenue: Annual Report 2021 Financial Highlights
- Primerica Hierarchy: The Primerica Success System
- Primerica was second-largest Term Life Insurance provider in 2021: Annual Stockholders Meeting
- Better Business Bureau Gives Primerica an A+ Rating: Business Profile Primerica, Inc.
- Average Earnings for Insurance Agent in the United States: Hourly Wage for Insurance Agent Salary in the United States
- Bad Retirement Advice Controversy: COMPLY-Primerica slogs through onslaught of retirement-plan cases
- Failure to Pay Full Benefits Controversy: Primerica Agents Accused Of Failing To Pay Claim
