My sister-in-law is constantly venturing into money making opportunities in an effort to shake her day job. She doesn’t necessarily want to be rich; she just doesn’t seem to enjoy having a boss. She’s been a bookkeeper, a travel agent, an Avon lady, and a franchisee for a used children’s store, just to name a few. None of these attempts at financial independence worked out for her. In fact, she usually comes out on the bottom instead of on top.
Last year, she stepped into the ring with Primerica Financial Services. As part of her training she needed willing volunteers that she could run her presentation with, aided by an experienced representative from the company. The trainer would actually give the presentation while my sister-in-law “learned”. Even as she is telling me this over the phone, I am rolling my eyes and thinking how much I really don’t want to do this. However, I like to be supportive so I agree that my husband and I will sit through a forty-five minute presentation.
To say I was a little jaded going into it is an absolute understatement. I loathe sales people. Not people who are trying to sell in general, but sales people who are pushing the sale down your throat. I don’t like dealing with those people, and I definitely don’t like having them in my house. Nevertheless, I keep an open mind, and go on faith, that my sister-in-law, who has known me for fifteen years, would not do this to me. Boy, was I wrong.
It’s the nature of these kinds of pitches to avoid giving consumers a heads up about what to expect. If you’ve never heard of Primerica, allow me to enlighten you.
Primerica sells term life insurance, rrsp’s in the form of mutual funds and mortgages. I did some research and it’s actually a pretty solid company with a long history. They don’t advertise; they acquire new clientele from referrals and “training” of new representatives. On their own, the products offered by Primerica are quite good. The rates on mortgages are high, but the term is thirty years, which means, your rate is locked in for the life of your mortgage, no renewals necessary. In that light, it’s understandable why it’s higher, and I will admit, people struggling with a heavy debt burden would do well to pay the rate and work on attacking the debt.
The philosophy of the company is financial education for consumers. The average person doesn’t have a “debt free” date or plan. Primerica encourages this, and offers an analysis of your current situation, citing how long it will take you to become debt free, and how they can help you become debt free faster. The math is solid, the plan is solid and the philosophy itself is noble and very much needed. My problem is with the pitch. You know, that forty-five minute presentation, which turned out to take almost three hours.
I won’t bore you with all the details, because it actually is quite informative and educational and I strongly encourage anyone who is curious to call them up and ask to see someone. It’s worth the time, but have your financial and insurance information ready for review; otherwise, you’ll waste a lot of time. Having said that, I must highlight the two big areas I felt were manipulative.
- Comparing Apples to Oranges: The sales rep had a binder filled with charts and information about investments. He showed GIC’s at an average rate of 3%, and showed what the long-term gain on such an investment would be. He then compared it to Primerica investments at 10% with an obviously higher return. It doesn’t take a genius to figure that out. The problem is, Primerica offers mutual funds, not GIC’s, and the entire proposal dances around that very fact.
So, heads up. A GIC is a Guaranteed Investment Certificate, which means, your principle (the amount you invest) is guaranteed and safe. Furthermore, your interest rate is guaranteed for the length of the investment. Mutual funds are not guaranteed. Your principle is at risk, so you could lose what you initially invested and the rate of return fluctuates dramatically. Sometimes you gain, sometimes you lose. The 10% return Primerica refers to is an average over time, for the highest risk level of mutual funds. The plain truth they don’t tell you, any bank or financial company dealing in mutual funds can offer you high-risk mutual funds.
- Stealing Sales from the Trainee: Our sales rep pushed us to start the life insurance application immediately. I was confused by that, since my sister-in-law was not yet licensed and I questioned how she would be paid for the sale. The rep carefully avoided a direct answer, insisting she would get something for it. My sister-in-law agreed wholeheartedly with this, so I caved, and even though all my instincts were screaming otherwise, I provided a cheque for the first payment to initiate the application.
Now it just so happens, I am one of those people who reads the fine print before I sign. On my application, it said I may cancel anytime during processing and be given a complete refund. A couple days later, that is exactly what I did. Don’t get me wrong, the insurance was a good deal, at a fair price. I cancelled because I wanted my sister-in-law to get full credit for the sale. That was the catch. Since it was being recorded under her trainer’s name, she would get a referral fee, and he would get the commission. Therefore, I waited until she was licensed and did a new application with her.
Overall, Primerica isn’t such a bad deal. They sugar coat a lot of the pitch to their own benefit, but really, what company doesn’t? We ended up with term insurance, which was already on our list of things to do anyway. There was plenty about the pitch I had to bite my tongue about. However, nothing they said convinced me they were a terrible company. The only caution I would recommend when dealing with Primerica is give yourself a few days thinking time before you sign for anything. Don’t worry about offending them, sales people always come back.
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