Wednesday, March 11, 2009

PFS Primerica Financial Services Compensation Plan

Today we are going to talk a look at the compensation plan of Primerica Financial Services. Primerica is a network marketing company that offers a range of financial related services such as life insurance, mutual funds, mortgages, and more!

If you would like more information how how network marketing compensation plans work in general, take a look at this post entitled how to evaluate a network marketing compensation plan.

To get started in Primerica requires an initial investment of $99. There may also be other fees depending on what state you plan on doing business with. These fees cover your license to sell life insurance, offer mortgages and to be able to offer financial secruities.

Primerica will reimburse you for these fees as long as you actually end up passing the exams involved. If you don't pass the exams, you are out of that money. Also, depending on what office you sign up with, they may or may not take care of these fees for you.

Primerica's compensation plan is based on a wide variety of different factors. Each product has a different method of compensation and it varies based on how much of a particular product the client needs and decides to purchase.

For example, the most popular product for Primerica is its term life insurance program. The company pays advanced commissions based on the client keeping the insurance for at least a year.

As a brand new licensed representative, you are entitled to a 25% commission based on the policy the client purchases and what they pay on an annual basis. The amount the client is charged is based on a wide variety of different factors.

Some of these factors include whether you are a smoker or non-smoker, your job (if you have a job that is considered hazardous), your age, any illnesses that may be common in your family, as well as your weight.

So if the policy you sell is $500 annual, your commission for that policy would be $125.

As you get promoted throught the compensation plan, your commission increases. For instance, at the next position, which is Senior Representative, your commission jumps to 35%. You also earn a 10% overide on the business submitted by any new license representatives that join your team that are not under or have achieved themselves the Senior representative position.

Here are the other levels in the compensation plan:

District Leader - 50% life insurance commission.
Division Leader - 60% life insurance commission.
Regional Leader - 70% life insurance commission.

Keep in mind, you get the difference between your level and the highest level achieved by anyone in the line of sponsorship that made the sale between you and the representative that made the sale.

So for instance, let's say you are a Regional Leader and you have a rep on your team sign someone up for a $500 annual life insurance policy. This person has 2 people between you and they are both Senior Representatives.

The rep that made the sale would earn $175. The 2 Senior reps between you would earn nothing. You would earn the difference between your level which is 70% and that reps level, which is 35%. The difference is 35% so you would also earn $175 from that sale.

One downside to Primerica's compensation plan is that the highest level you can achieve in the business part time is Regional Leader. The next level above that, Regional Vice President, you HAVE to be full time in the business in order to achieve that level.

In most network marketing companies, your ability to achieve levels in the compensation plan have nothing to do with whether you are part time or full time. They are simply dependent on you acheiving certain sales milestones.

RVPs earn 95% commission on life insurance they personally process. You also HAVE to get an office and all of the expenses associated with it when you reach the level of Regional Vice President.

I have met a number of former RVPs from Primerica who enjoyed their business up until qualifying for Regional Vice President. Once they had to start dealing with the expenses and headaches associated with running an office, they became burned out and eventually quit the business even though they were making money.

You also have to give up your strongest organization to your RVP when you advance to the RVP position. This is definitely something that I don't agree with at all.

Another downside to Primerica's compensation plan is that the other products that you are able to sell play no role in your ability to get promoted. You can still earn commissions and overrides from them, but they don't contribute to your promotion requirements at all.

Here's an example of the compensation plan for loan refinances. Keep in mind this may vary from state to state so don't take these numbers as set in stone...

Representative - 0.312%
Senior Representative - 0.364%
District Leader - 0.442%

So for instance, if you are a Senior Representative and you get a client to sign up for a $200,000 mortgage with you, your commission on that mortgage works out to $728.

Let's take a look and see if Primerica matches up with the 3 points to review for compensation plans.

1. How easy is it to make $500 to $1000 a month?

To make $500, you just need to help two families or four individuals a month get a life insurance policy at the entry level, which is the representative position. You can get this down to one family or 2 individuals a month as you move up the compensation plan.

How many people would you need to talk to a month to reach this goal? Assuming you are at the entry level, here are the numbers

50% - 4 families a month (1 per week)
25% - 8 families a month (2 per week)
10% - 20 families a month (5 per week)
5% - 40 families a month (10 per week)
1% - 100 families a month (25 per week)

All of these numbers are realistic for a part timer (100 families a month is aggressive but possible) so it is very realistic to make $500 to $1000 a month in Primerica. Keep in mind, this is only with the life insurance incomes. You can make even more offering the other products and services.

The only downside is that many people don't even make it that far because they fail the license requirements and never get certified to begin offering insurance.

So I would say it is easy to make $500 to $1000 a month in Primerica with the caveat of needing to be able to pass the exams.

2. How much does the product cost and how much does it cost to get started as a distributor?

The average term life insurance policy is about $40 a month. The distributor fees will cost you in the hundreds of dollars when everything is said and done. Considering the type of money you get paid, I believe the product cost and distributor costs are very reasonable.

3. Is there competition for your products and services?

There is tremendous amounts of competition for Primerica's products and services. The financial services industry is a trillion dollar industry with literally hundreds if not thousands of companies that service this marketplace.

The good thing is financial services aren't something that clients are going to necessarily switch as easily as they might for a cosmetic or a nutritional product. So once you get the client, your retention should be higher than it would be in other types of network marketing companies.

As a disclaimer I must let you know that although Primerica is doing very well financially, they are owned by Citibank, which as you know is doing so poorly, they are requesting government bailouts at the time of this writing.

This association is hurting Primerica in many ways. Besides the bad press that Citibank is receiving, the parent company's troubles is impacting Primerica in other ways. For example, Primerica recently had to cancel BOTH its International Convention AS WELL as its Incentive Trip.

I didn't hear why, but if I had to venture a guess, I'm sure it has to do with the fact that it wouldn't look good if Citibank is getting bailout money while Primerica reps are partying at a resort in Atlantis. Citibank is looking for buyers for its Primerica business and hopefully for Primerica, they will find a buyer quickly.

In short, Primerica is an excellent business opportunity, one of the best that I have seen in this industry. The fact that they have over 100 people earning over a million dollars a year and over 1000 people earning six figures is a testament to the power of the opportunity.

The downside is that it is not an opportunity for everyone. A lot of people don't even make it to the starting gate because of the insurance requirements. The sales cycle is also one of the lengthest in the network marketing industry because of the regulations required.

If you are interested in Primerica, make sure you do your homework and sign up with an organization that has a strong training system. Don't just speak to the person that's signing you up. Ask to speak to the Regional Vice President as well.

If you like the compensation but don't like the licensing requirements, there are other ways that you can earn that type of money without needing a license.

If you are interested click on the following link and check out the company that I believe offers the best network marketing compensation plan.

However, if you are joining Primerica or are already in Primerica and would like to learn of some strategies that will help you build your business feel free to check out this amazing recruiting trick.


Peter said...

There are various types of term life insurance quote, they all have some common attributes. You pay an insurance company what are called premiums. At your death, the life insurance company pays an amount to the people you named in your policy, called beneficiaries. Also it's interesting that if you named a beneficiary(ies) they'd receive the insurance amount free of income tax.