Tuesday, June 21, 2011

Is Primerica A Scam? What it cost me..

This is the all time famous question isnt it?

Well this is just my experience with it.... about 5 years ago a friend invited me over saying they wanted to show me something. And of course I went to find this person representing Primerica. It was a time in my life when I was big on reading John Cummuta and Suze Orman. So what I got from the presentation was making money while teaching people these concepts that Ive been studying. The snowball debt payment plan worked well for me at the time. So why not teach others? My friend and I signed up on the spot. The sign up was what $200 at the time.

We immediately took the classes to learn about Life Insurance. This was not something I ever thought Id be selling. We didnt have insurance as a family so we got it thru Primerica, in NY they use National Benefit Life. We never bothered to ' shop' around cause this was the 'last place youd ever get these products from'. This representative was either very convincing or we were just gullible. Cost of class? Not sure.

Once we had license we were able to write policies on our own. I have written a few policies in my time as a 'Primerica' Rep. Only one of them has had a problem. My RVP reviewed the application and checked a box that I didnt check. It automatically increases the benefit annually. This person has had so much trouble cancelling this feature and I have no idea why the RVP would have check this. As a rep I never past Sr Rep level. My commissions were piddly as they have to pay me, my upline (my friend the District Leader), the RVP, the SRVP and everyone else above them. So I figured Id go for my securities licenses, I knew some people that wanted to do roll overs and such. Well that cost me about $600 give or take. I had to pay for books ($100), computer online classes, taking ALL the tests and that was just the first year. I didnt even pass the series 6 the first time! My RVP told me to study the computer classes and get at least 90% before taking the test. I dont know if I really learned anything, it felt like all I was doing was memorizing the answers. When I passed I was so excited! But I still dont know anything. I rolled over my IRA which was about 20K and I was paid under $150. There was an upfront sales charges I had to pay for the roll over, which was basically the commissions. My uplines made the most on this transaction. Then I rolled over one for my friend, which was about 75K. I made about $800 on that one. I realized that again I was not making money on these transactions. What the heck? I learned from interviews at other companies I should have been paid a whole lot more then that!

As the years went by I couldnt find anyone to 'help', so my licenses were just sitting there. The first year of renewal they told me if I didnt have a 'transaction' I couldnt renew my series 6 & 63. They eventually came back and said they were waiving that specific year so I was able to renewed the first year. Cost me close to $500, the second year I couldnt do it, and I was not allowed to renew since I didnt have a transaction. Besides I didnt want to spend another $500 for these licenses. I let them lapse, my life insurance also lapsed on my birthday. I was happy as I felt restricted from doing anything else during this process of waiting.

After some point my RVP convinced me to refinance into a SMART loan. In the end you pay less interest, you pay bi weekly, stop chasing rates... etc... we didnt have a bad loan, it was fairly decent. There was nothing 'hidden' in the mortage. I have seen mortgages that were actually 40 years loans, Ive seen some with balloon payments, and of course ARMs. We had none of those. We had some debt out there but we were fine. They convinced us to combine it all into a refinance. Well we did. I made $800 on that transaction. We never knew the 'rate' as he said its irrelevant and dont worry. It wasnt until the mortgage was moved to another division of Citigroup that we saw an interest rate of 7.78%. No we do not have bad credit and we didnt have bad credit back then either. So what was that all about?

We had plenty of equity in the house so the refinance was a cinch. But we had to pay our own property and school taxes. There was twice a year that were a little hard for us since they were taking payments directly out and the month had 3 payments. We were paying $806 bi weekly plus had to save an additional $500 a month for taxes and insurance. Today I find out that 7.78% was based on saving .25% because they took the money directly out of our account! So the actual rate 8.03%?!?!

My spouse was livid when we found these things out. But he is nice enough to mention it was all my idea. What makes this worse is viewing the statements on line and seeing that maybe $100 was hitting principal! But you expect that with mortgages. We were stuck with this mortgage for at least 3 years or we would have had to pay a penalty! Our three years were up a few months ago but the value of the house has dropped a lot. So we've been shopping.

On a positive note: We were able to get Quicken loans to help us out of this mortgage. Yea its a 30 year again, but the monthly payment will be $1670 which includes EVERYTHING saving us over $400 a month. And the rate is 4.5%! Its an FHA loan and nothing is hidden. This will be our last mortgage for sure. With that extra $400 a month we can pay down the mortgage easily.

I am almost rid of Primerica in my life.... we refinanced, I let the licenses expire, I closed out that IRA, (Cant tell you how much I lost over the years), havent decided if I will explore a new term life policy. I am strongly for TERM LIFE as I believe its the way to go, and I know as one gets older rates go up so I may not change that.

Oh and the rep that signed us up left Primerica for Chase! Can you believe that crap! All that talking about having a 'job' Just Over Broke, Primerica is the way to go.. blah blah blah! I was livid when I heard that. Any they keep calling me to work with them. Aint happening!

So what is my final tally: $1400 in expenses listed here, but there were plenty of boot camps, get together events (probably at $100 a pop!), oh and dont forget the convention! We flew down to Atlanta, stayed for a few days and drove home. That may have cost me $600 there, plus all the flyers, catalogs, post cards, paperwork, CDs that were purchased. Let not think about how much that mortgage cost us!

Please think hard before joining that company. Yes many people can make it work but more then half fall out.

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