Who is Primerica? Legit?

[HelloHockeyFans]

Originally Posted by alltherage

I am learning... hahaha. I guess thats the one thing I can take away from this. My brother put it best for me:

Usually if a company needs to advertise positions in the paper or online, they are not good to work for.

However, that advice is a little out of date now that EVERYONE needs people.

Well, I wouldn't take it that far.

Huge corporations that are very good to work for (from what I hear) -- like Bell Canada, for example -- list jobs on Workopolis.

Don't cut it out as one of your resources, but make sure it's not your only one.

[MolsonInBothHands]

Originally Posted by SeeGeeWhy

As impressive as your returns sound, quite frankly it appears that you did this yourself. A person can educate themselves on basic financial matters and still do self directed investing and get the same returns as you mentioned above.

No arguments there, the information is readily available. However, at that time in my life, I would not have found it without being directed to it, nor would I have looked for it. I could have just as easily have fallen for a life insurance policy "that pays for itself in 10 years, and has a cash value when I am 55." That makes me shudder.

So what exactly do they provide to you, that you couldn't do for yourself, and how much do they charge to do that?

If they don't manage funds that they sell to you, they need to be making a profit somewhere or else they wouldn't do what they do.

So what does Primerica charge you to invest with them?[/quote]

They provide free seminars discussing how to get out of "Freedom 55" traps. They teach how mutual funds work, and the advantages of term life over whole/universal life. For some that may sound very basic, but it is sad how many people don't know this, and many of them think they are doing really well with their money. An agent is paid if/when you purchase life insurance in the form of commission from the LI company. If you invest, they are paid commission from the fund company you invest with. There is no direct payment from you to the agent.

The only money Primerica ever gets from me is my monthly payment for my personal life insurance. That soon will come to and end because I will no longer need it, which is another thing they teach you: you should not need life insurance for the rest of your life.

[Slava]

you should not need life insurance for the rest of your life.

Yeah, this is true....if you can die with no property, wealth or obligations that you want satisfied. Either that, or if all of the saving that you are doing is 100% tax efficient, and there are no worries then.

[MolsonInBothHands]

Originally Posted by Slava

you should not need life insurance for the rest of your life.

Yeah, this is true....if you can die with no property, wealth or obligations that you want satisfied. Either that, or if all of the saving that you are doing is 100% tax efficient, and there are no worries then.

Life insurance is meant to replace lost income. A rule of thumb is the insurance value should be 8-10 times your annual income in order to replace your income. If, through investments you manage to create a pool of money which could replace your income upon death, you are now self insured.

[Slava]

There are a lot of uses for life insurance however, not only lost income. If you own a property that you want to keep in the family for example, it is far better to have a life insurance policy to pay the taxes due upon death than it is to have to sell the property to pay those taxes.

I would far rather pay a little bit of extra money each year to have my savings stay intact for my family, rather then them having to deal with a huge tax bill upon my death.

I'm not even going to get into all of the estate planning and wealth creation techniques that can come from a properly structured insurance plan here.

[MolsonInBothHands]

Originally Posted by Slava

There are a lot of uses for life insurance however, not only lost income. If you own a property that you want to keep in the family for example, it is far better to have a life insurance policy to pay the taxes due upon death than it is to have to sell the property to pay those taxes.

I would far rather pay a little bit of extra money each year to have my savings stay intact for my family, rather then them having to deal with a huge tax bill upon my death.

I'm not even going to get into all of the estate planning and wealth creation techniques that can come from a properly structured insurance plan here.

Well I am not up on what taxes are due for properties upon death, can you elaborate? Are they significant enough, that if your income can be replaced due to wise investing, they can not be satisfied? Just asking. Regardless, your life insurance needs change as your life progresses, and as your investments progress. It is my opinion, if you have the same insurance policy you bought at age 30, at the age 65, you probably could have made much better use of your money, and I still don't intend to have it for the rest of my life.

[Slava]

Its true that most people need less insurance and different insurance as they age, but seriously cost-wise its cheaper to buy an insurance policy to cover the various tax liabilities that will exist upon your death.

This is especially noteable when you look at a cottage or cabin. The original cost might be $250k, but its value could well be 1.25 Million (to keep things easy). There is a $500k taxable hit then upon the death of the owners. Even if you've invested, it would be cheaper to pay the almost $200k in taxes with an insurance policy. There are also taxes on RRSP's and investments as well as any properties other than a principal residence. Finally, and perhaps most importantly life insurance doesn't have to go through your estate and is 100% tax free.

[SeeGeeWhy]

I really need to learn more about what role taxes play in financial planning... it is the last bastion.

I wish that the public education system had more about basic finances, taxes, investing, economics, etc in the cirriculum.

Learning this crap now that I am trying to work is very time consuming, frustrating, and risky.

PS - Nice post Slava, that is a very good point.

[Slava]

Well if anyone wants more information (not just a sales pitch) please feel free to PM me....this is what I do for a living!

[MolsonInBothHands]

Originally Posted by Slava

Its true that most people need less insurance and different insurance as they age, but seriously cost-wise its cheaper to buy an insurance policy to cover the various tax liabilities that will exist upon your death.

This is especially noteable when you look at a cottage or cabin. The original cost might be $250k, but its value could well be 1.25 Million (to keep things easy). There is a $500k taxable hit then upon the death of the owners. Even if you've invested, it would be cheaper to pay the almost $200k in taxes with an insurance policy. There are also taxes on RRSP's and investments as well as any properties other than a principal residence. Finally, and perhaps most importantly life insurance doesn't have to go through your estate and is 100% tax free.

What is the huge tax hit you can face? Is it a form of capital gains tax? Is that only applicable upon the sale of the property? I have recently seen farm land passed through inheritance, if the heir had that amount of taxes it would have bankrupted him, and I know he didn't get a cash benefit of any sort, just the land. I also know the land value has sky rocketed in the last 10 years. Is it possible there are other methods available in estate planning that can circumvent this? Or is it because it is farm land, and not say vacation property. You seem knowledgable in this area, so I would love to hear the angles. I am sure a life insurance salesman would say no, but I would like to hear from someone with no vested interest.

Otherwise, I can see your point, in that one instance, to maintain luxury for my kids upon my passing, that life insurance may be useful for. My purpose for having life insurance is much more mundane and practical. My concerns are for my spouse, and my children, while they are not self sufficient. I have no intentions of keeping my children wealthy when I die. I plan to spend every penny, maybe even be in debt when I go.

EDIT: Taxes on RRSP's are deferred when given to spouses, children and grandchildren, are they not?

[Willi Plett]

Originally Posted by MolsonInBothHands

What is the huge tax hit you can face? Is it a form of capital gains tax? Is that only applicable upon the sale of the property? I have recently seen farm land passed through inheritance, if the heir had that amount of taxes it would have bankrupted him, and I know he didn't get a cash benefit of any sort, just the land. I also know the land value has sky rocketed in the last 10 years. Is it possible there are other methods available in estate planning that can circumvent this? Or is it because it is farm land, and not say vacation property. You seem knowledgable in this area, so I would love to hear the angles. I am sure a life insurance salesman would say no, but I would like to hear from someone with no vested interest.

Otherwise, I can see your point, in that one instance, to maintain luxury for my kids upon my passing, that life insurance may be useful for. My purpose for having life insurance is much more mundane and practical. My concerns are for my spouse, and my children, while they are not self sufficient. I have no intentions of keeping my children wealthy when I die. I plan to spend every penny, maybe even be in debt when I go.

EDIT: Taxes on RRSP's are deferred when given to spouses, children and grandchildren, are they not?

You are correct, it is a capital gains tax and there are special rules in place for the deferral of taxes on farm property when it is left to a son/daughter etc. and it has been actively farmed (not just any land holding). The example Slava gave of Cottage is the most common but rental properties which have become very popular in Calgary would also fit the mold. The cottage is the one of particular significance because it often has sentimental value and was sometimes purchased with the plan/intention of being used for generations. Thus, if it has appreciated significantly in value, the tax liablility can be very large and the most efficient way to provide for it is through permanent insurance.

You are also correct in the fact that most average people don't want or require permanent insurance but for wealthier families and for business owners it has many applications. Another facet of this type of insurance is that you can 'overfund' it since it has an investment component - that is you can put more money in than the premuim required. The advantage to this is that the money grows tax-deferred much like an RRSP does. For wealthy individuals this can be a powerful wealth accumulation strategy. But most of the average people I meet don't even maximize their RSP, let alone need this.

The problem is that in the past permenant policies paid better so insurance people often sold them when they weren't what the client needed.

If anyone ever wants more clarification or to learn more, feel free to PM me. I am a professional in the industry and I offer no charge consultations and I run seminars quarterly to help people to better understand these topics.

[guzzy]

Originally Posted by alltherage

Hey guys, I did a quick "fata" search but there are no real stories or information on these guys. I just got a call from a guy named Mike and he wants to set up a "Group Presentation" and then an interview. Everything about this sounds like a scam, but wiki shows them as legit. Anyone had any experience with these guys?

It's basically the Amway with money. They do have decent life insurance and mutual funds but don't work for them, your family will hate you and they will exploit you. It is literally the Amway of money.

[nmhen]

IF you're going to start out selling anything in the financial services field you're going to be expected to hit up your family and friends sooner or later. It's just the way it works. And if you can't pitch them how the heck are you going to pitch some little old lady?

I'm a wholesaler for OppenheimerFunds. Been in the industry for about 10 years now. I'm happy to offer any insight as needed.

[Slava]

Originally Posted by nmhen

IF you're going to start out selling anything in the financial services field you're going to be expected to hit up your family and friends sooner or later. It's just the way it works. And if you can't pitch them how the heck are you going to pitch some little old lady?

I'm a wholesaler for OppenheimerFunds. Been in the industry for about 10 years now. I'm happy to offer any insight as needed.

###

[MolsonInBothHands]

Originally Posted by nmhen

IF you're going to start out selling anything in the financial services field you're going to be expected to hit up your family and friends sooner or later. It's just the way it works. And if you can't pitch them how the heck are you going to pitch some little old lady?

I'm a wholesaler for OppenheimerFunds. Been in the industry for about 10 years now. I'm happy to offer any insight as needed.

Exactly. Not to mention, it was my family members who probably needed the guidance out of anyone I knew. My Dad is over 60 now, has 25 years on me, has made a pretty decent living, and has one third of what I do put aside for retirement. He is in for a rude awakening when the first CPP cheque arrives. Even a bad plan might have been better than no plan at all.
[/tangent]

[nmhen]

Originally Posted by MolsonInBothHands

Exactly. Not to mention, it was my family members who probably needed the guidance out of anyone I knew. My Dad is over 60 now, has 25 years on me, has made a pretty decent living, and has one third of what I do put aside for retirement. He is in for a rude awakening when the first CPP cheque arrives. Even a bad plan might have been better than no plan at all.
[/tangent]

forgive the drama, but it's this exact scenario with my OWN father that prompted me to get into this industry. The biggest thing getting in the way of my old man taking advice from me? Pride. It's sad and very, very scary.

[Slava]

Originally Posted by nmhen

forgive the drama, but it's this exact scenario with my OWN father that prompted me to get into this industry. The biggest thing getting in the way of my old man taking advice from me? Pride. It's sad and very, very scary.

Its the same for a lot of us! I guess the issue here is that there are a lot of boomers who are going to have that rude awakening in the next few years...

[MoneyGuy]

One of my favourite topics. So many financial questions that I should start a thread – I’m a financial planner, ask me anything. No worries, I won’t do that.

Primerica is not a scam, which implies something illegal or improper. However, they are a shoddy financial services organization. They are a pyramid organization. I don’t mind Amway but selling financial security through poorly trained goofs is way different than selling soap.

This rant will get a little long so I hope you can stick it out.

Their schtick is buy term insurance and invest the difference. That’s correct about 96% of the time, but occasionally a different product fills the need. These goofs are brainwashed into a one-size-fits-all strategy. It’s not so.

I’m dealing with a client right now what has a delicate tax situation. I’m not a tax expert and am always careful not to pretend to be one, but I can give the client good advice and some good ideas. Those Primerica goofs have no idea about any of these things.

What they don’t know would be funny if it was not so scary. I’ve taken over accounts from Primerica “planners” where bad advice cause significant tax problems. For example, non-registered switches between investments. If you sell one non-reg investment to buy another, it’s usually a taxable event. If you know that, you’re already one up on many Primerica goofs because many of them don’t seem to grasp that simple concept. There are strategies that you can use to allow you to move from one non-reg investment to another without having a tax bill. Usually, these goofs don’t seem to know what those are.

I’ve seen other cases where bad advice has caused problems for the client. Sometimes those problems have been severe. I know of a case where a young fellow joined Primerica and started to call people he knew. (Sit down, because this one will make the little hairs on the back of your neck stand up.) His parents were newly retired and living on a fixed, modest income. Back in 2000 (you’ll remember when the market peaked, right), eager to get a nice commission, he sold his parents on the idea of leveraging (borrowing to invest).

Anyway, he showed his parents the dizzying returns of the last few years prior to 2000. When you can borrow money at 4-5% and get returns of 15-20%, it’s a no-brainer, right. Well, his parents borrowed 250K and then the market tanked. Big time! The parents got frantic when things tumbled to around 175K but held on on the advice of the son, who didn’t know much more than the parents. The investments kept falling and finally they sold out at around. The rookie planner (now out of the business) earned his 10K commission but his folks lost 100K plus interest paid. I know this case because I know the fund company rep who was called in to try salvage the situation, but there is nothing that can be done at that point.

Primerica goofs think they know everything but really know very little. In fact, they’re armed and dangerous. It’s like giving a 10-year-old a driver’s license because he knows where the gas pedal is and then letting him drive in city traffic.

For anyone who has basic needs (maybe a small RRSP), they can do little damage. But if you need any advice at all, you’re already outgrown Primerica.

They provide very biased advice. They push overpriced insurance. Call them and get a quote on $400,000 of term insurance and then visit an independent broker and compare prices. You’ll be shocked.

Their meetings are supposed to be training, but they’re rah-rah sales events. Attend one and you’ll feel like you’ve attended a religious revival meeting. They think they’ve found God but belong to a cult.

They actively discourage legitimate training. The Certified Financial Planner designation is the recognized standard, yet virtually no Primerica people are CRPs. The reason is that getting the CFP is difficult and it takes time away from what they’re supposed to be doing – recruiting and training recruits. If you know nothing you don’t really know how ignorant you are.

Unless you have very small assets and don’t need real advice, stay clear of these goofs. And don’t get work for them. Most new Primerica folks are out of the business in two years. The occasional person does very well with them but I don’t know how they can look themselves in the mirror each morning. I couldn’t, and didn’t so I left. You see, I was one of those goofs. Now I’m with a legitimate firm and I respect myself.

If anyone here is with Primerica, shame.

/rant over – thanks for reading

[SportsJunky]

Originally Posted by 604flames

Are they an affilate of Kramerica?

Well played sir.

[Slava]

moneyguy, that is a great post. I totally agree with everything in there, without exception! I've also had the horror of helping people recover from their advice...I just didn't know whether I should come out swinging in this thread!

Great Post!