Chances are you’re here because you’re considering signing up to Primerica and dipping your toe into the world of network marketing.
It sounds great – who wouldn’t want to make some extra cash, while helping people get their finances and insurance policies in order at the same time?
However, you’re a little hesitant.
Maybe you think that everything sounds too good to be true, or you’ve heard people saying things like ‘Primerica is a pyramid scheme!’ and ‘Primerica is a scam!’ and you want to figure out whether Primerica is legit before diving in headfirst.
In this article, we are going to dive into the Primerica MLM opportunity and find out what’s really involved in the job, and whether Primerica is legit or just another pyramid scheme in disguise.
Is Primerica a Pyramid Scheme or a Legit Business Opportunity?
What is MLM?
Although most people believe otherwise, Primerica is, in fact, an MLM company.
MLM stands for multi-level marketing, and MLM companies are also referred to as network marketing companies or social selling companies.
MLMs have been around for years, and popular MLMs include Nu Skin, Monat, Pampered Chef, and even Avon!
You don’t receive a salary in a multi-level marketing company.
Instead, you earn money from selling products to people you know and recruiting others into the business.
When you recruit a new person and that person begins earning money, you will earn commission from the sales and recruits generated by THAT person.
This continues down in multiple levels (hence multi-level).
Imagine a triangle.
If the person at the very top of the triangle recruits 10 people, and every one of those 10 people recruit another 10 people, and each one of those people recruit another 10 people, you’ll be making commissions from EVERYBODY within the triangle because they’re all in your direct downline (the people underneath you in an MLM are referred to as your ‘downline’ and you’re their ‘upline’).
All you had to do was recruit 10 people and you make money from 1100.
While MLM companies like Primerica also give you the chance to make money from selling their insurance and other financial products, most people in MLM companies prefer to recruit others because they stand to make a lifelong passive income from that person, whereas if they sell a product they’re just going to receive a one-off commission.
The ultimate aim of somebody in an MLM then, is to have as many people in their ‘downline’ as possible, enabling them to form large amounts of passive income for little work.
What is Primerica?
Primerica was founded in 1977 by Arthur L. Williams Jr.
It is an insurance and financial services company based in Duluth, Georgia.
After his father suddenly passed away from a heart attack in 1965, Arthur’s family was left struggling, as his father’s whole life insurance policy wasn’t worth much.
Thinking that there had to be a better insurance model, he did his research, and discovered ‘term life insurance,’ which was cheaper, but much less well-known than whole life insurance.
Term life insurance is a type of life insurance that lasts for a fixed term (e.g. 10 or 20 years). It offers insurance for loss of life during that term, and once the term ends, you can renew or end the policy.
Arthur decided to show people that term life insurance was not only more suitable than whole life insurance (for most people), but also much more affordable.
He wanted to emphasise that people could invest the money they saved, coining the phrase ‘Buy Term and Invest the Difference.’
So, after a few years spent working in traditional insurance companies, Williams decided to create his own company, using the MLM structure.
While Primerica’s flagship product is its term life insurance policies, it offers a wide range of other financial products.
Primerica’s main products are:
- Term life insurance
- Financial investments (mutual funds, managed investments, annuities, business retirement plans etc.)
- Long-term care insurance
- Auto and home insurance
- Credit monitoring
- Debt management plans
- Legal protection and ID theft protection (they partner with LegalShield on this)
It’s worth pointing out that if you are enticed by Primerica’s products, it would be wise to shop around, because many companies offer the same services for much cheaper (or even for free if you’re an existing customer).
It should also be noted that unlike most other insurance companies, Primerica do not allow you to switch from a term life insurance policy to a whole life insurance policy – you must apply again, and if your health has deteriorated, your application will likely be declined.
Inside the Primerica MLM Opportunity
How do Primerica recruiters make money?
There are 4 main ways to make money with Primerica:
- Sales commissions on insurance – Commissions earned when you sell any financial plans
- Overrides on downline’s insurance – 10% override commissions for the sales from your downline (you can earn a commission for 11 tiers below you)
- Differentials from downline’s insurance sales – Commissions for helping your downline make sales
- Commission on other products – Commission from any other Primerica product sales
However, there’s a catch.
Because you have to be licensed to sell insurance or investment products, you can’t actually earn any commission until you’ve got your licence.
The process of getting your licence takes at least 3 months, during which time you’ll be expected to pay $25 per month for your personalised Primerica website, plus the initial $99 sign-up fee.
This means you’re starting at a $175 negative (at least) by the time you are qualified to sell Primerica products.
When you (hopefully) pass your exam and receive your licence, you will be entitled to a 25% commission on any insurance plans you sell.
So, if you sell an insurance plan that costs $1000 per year, you’ll make $250 right away, which sounds pretty good, right?
It’s certainly better than the couple of dollars you’ll make for selling some Avon makeup.
However, another catch (Primerica have a lot of these hidden catches, don’t they?) is that if the customer defaults on their insurance payments in the first year, you will be expected to pay that money back, so it isn’t really secure for 12 months.
You also make commissions for selling investments and loans.
For investments, you will receive 30% of the dealer cut, which is usually a fairly low amount like 4.5%. If someone invests $1000, you’ll make about $13.
For loans, you will receive 0.312% commission, so if you sign someone up for a $10,000 loan, you’ll make $31.
Those numbers aren’t as sexy as the insurance plan numbers, but you don’t have to worry about chargebacks with these commissions.
Once you directly recruit 3 people into the business, you qualify as a Senior Representative.
This will not only increase your personal commissions (e.g. 35% instead of 25% on insurance sales), but you will also receive bonuses when your recruits make sales or bring people into the business.
As you move up the ranks within the company, your commission will increase, as you can see in the image below.
It’s worth pointing out here that very very few people will ever make it to the higher ranks in the company.
What’s more, because a large part of making money with Primerica is dependent on the success of people who may be so far in your downline that you don’t even know, your own determination and work ethic doesn’t really factor into your success with Primerica.
How much do you make with Primerica?
In order to see how much money Primerica recruiters are making, it is necessary to see their Income Disclosure Statement.
An Income Disclosure Statement is a document that allows us to see exactly how many people are earning money with an MLM company, and how much of it they’re making.
While Primerica technically have an Income Disclosure Statement, the information on there is laughably brief, and you really can’t gather a lot from it.
What you can gather information from is their Annual Report, although at 221 pages long, you’d be forgiven for not reading the whole thing (it’s almost as if it benefits them to hide the truth within this report, right?).
I took a look at the Primerica Annual Report 2022 to see what I could uncover.
I discovered that in 2022, there were 359,735 new recruits to Primerica, but only 45,147 newly-licensed sales reps, meaning that only meaning only 12.5% of new recruits ended up passing their licensing exam (these recruits would still have to pay the $99 sign-up fee and $25 per month for each month they were with the company).
This means that 87.5% of people who joined Primerica never even qualified to make money.
Of those that did, they made an average of $7,479 in 2022, which equates to around $623 per month.
Now, by no means is this good, but if you’re just treating Primerica as a side hustle, it’s not bad either.
Until, that is, you factor in that this average is MASSIVELY SKEWED by the handful of people at the very top of the company who are earning millions.
It is highly likely that the vast majority of Primerica recruiters are making WAY, WAY less than $7000 per year.
How much does it cost to join Primerica and be a Primerica recruiter?
The cost to join Primerica is $99, plus an additional $25 per month for your Primerica website, totalling $399.
You then have to pay $100 for a licencing class and background check, and a further $40 to take the licencing exam.
Primerica claim to reimburse agents who pass the exam, but the 87.5% that don’t will not get their money back.
So then, 87.5% of people who join Primerica never make a dime, yet have to pay a minimum of $239 (sign-up fee, background check, licencing exam), plus however many months it takes to be ready for the exam (3 months on average, according to Primerica = $75).
This means that almost 90% of people who join Primerica pay AT LEAST $314 and make zero money back.
Primerica is not without its controversies, and in 2014 alone, Primerica faced 238 lawsuits from people alleging that they had been sold inappropriate financial products for the financial gain of the sales team.
Primerica eventually settled on $15.4 million (and BTW – nobody settles if the case against them isn’t strong).
Primerica vs WFG
People often wonder what the difference between World Financial Group (known as WFG) and Primerica is.
To put it simply, the two companies are incredibly similar.
Both Primerica and WFG are MLM companies that sell insurance products. Both focus massively on recruitment and have similar commission structures.
Is Primerica a pyramid scheme?
In order to see whether Primerica is a pyramid scheme in disguise, we must first outline what a pyramid scheme is.
What is a pyramid scheme?
Pyramid schemes are very similar to MLMs, but the main difference is that MLM distributors are supposed to make more of their money from product sales rather than recruitment.
A traditional pyramid scheme takes an initial investment from each member and promises to pay them for enroling others into the scheme, meaning that people are buying into an ‘opportunity’ to get rich.
However, as members increase, recruiting quickly becomes impossible and so most members are unable to profit or even make their initial investment back.
The Wikipedia diagram below illustrates just how unsustainable this business model is – after just a few levels of recruitment, the scheme would have recruited everybody in the world and there would be no-one left to recruit!
Because it’s impossible for most people to make any money in a pyramid scheme, pyramid schemes are illegal.
However, most pyramid schemes have got wise to the fact that they have to offer a product in order to appear legit, but even though a business may have products, the focus will always be on recruitment rather than product sales.
Because there are so many of these ‘pyramid schemes with products,’ around, the FTC hasn’t quite caught up yet, and so many people believe that just because a company hasn’t been shut down yet, it can’t possibly be a pyramid scheme, which simply isn’t true.
In order to see whether Primerica is a pyramid scheme, we must attempt to answer 3 questions.
1. Are most people unable to profit?
Earlier in the article, I showed that 87.5% of people who pay the sign-up fee and join Primerica never even qualify to make sales, meaning that only 12.5% of them stand a chance of making money.
It’s clear to see that most people in Primerica are unable to ever make a profit.
2. Do you have to ‘pay to play?’
If you are one of the lucky few who passes your licensing exam, the minimum amount you will have to spend to be a part of Primerica for one year is $499 (this takes into account the $40 that will be reimbursed by Primerica if you pass the exam).
I don’t know about you, but I would never join a company that expects me to pay to work there (and contrary to what they will tell you, no, you will not be a business owner if you join Primerica, which is a huge corporation).
3. Is there a heavy focus on recruitment?
Like all MLMs, Primerica has a very aggressive approach to recruiting, with the only way to increase your commission rates being to recruit at least 3 people into the company.
On page 26 of their 2022 Annual Report, they state that they ‘view a continuous recruiting cycle as a key component of our distribution model.’
They also flirt with the idea that they operate as a pyramid scheme on page 37 of the report, when they say ‘There are a number of laws and regulations that could apply to our independent contractor distribution model, which could require us to modify our distribution structure.’
In the ‘Risk Factors’ section of the report, they state that if they become subject to these laws, they could have to ‘regulate the manner in which we recruit independent sales representatives that may increase the expense of, or adversely impact our recruitment of, new independent sales representatives.’
They mention the FTC Act, saying that it prohibits ‘fraudulent or deceptive practices’ including ‘pyramid schemes,’ and acknowledge that ‘there is a risk that a governmental agency or court could disagree with our assessment [that they are not a pyramid scheme]’.
Honestly, if your business wasn’t a pyramid scheme, why would you have to state in your own financial report that the court or government might deem your business to be a pyramid scheme?!
You can read the full report here.
Is Primerica a Pyramid Scheme? | Final Thoughts
Most MLMs closely resemble pyramid schemes and Primerica is no different.
With a huge emphasis on recruitment, a ‘pay to play’ model and huge likelihood that barely anyone in the company is making money, Primerica definitely appears to be functioning like a pyramid scheme in disguise.
If it wasn’t already clear, Not Your Boss Babe does not recommend joining Primerica, or any other MLM!
Alternatives to Primerica
If you’re looking for a side hustle or a work from home job, you may find these articles helpful:
Advantages and Disadvantages of Blogging
Easy Freelance Jobs for Beginners
Best Side Hustles for Single Moms
How to Sell Feet Pics Online
Secrets to Selling on Poshmark
Profitable Digital Products to Sell on Etsy
How to Become a Micro Influencer
That’s about it for today, but as always, if you have any questions then don’t hesitate to leave them in the comments section below and I will get back to you!
Until next time,