Thursday, July 30, 2009

Primerica increases Metlife's Variable Annuities sales

This portion of the news report was taken from Reuters titled, "Metlife Posts $1.4 bln quarterly net loss":

MetLife said its annuities business saw a 43 percent increase in deposits in the quarter, stemming from a record $4.5 billion in variable annuity deposits.

Life insurers are seeing increased demand for annuities as Americans begin to deploy cash more actively into retirement investments.

Variable annuities are much like mutual fund investments, except they include features such as a guaranteed stream of retirement income.

But MetLife's strong balance sheet is helping it stand out against rivals.

"MetLife, unlike some of the other companies, is benefiting from a 'flight to quality,'" said Morningstar's Rambaldini.

Unlike half a dozen of its peers, MetLife never asked to be included in TARP, a federal funding program originally intended for banks, instead tapping capital markets when it needed to bolster capital.

The company's net worth, or the book value of its equity, rose about 18 percent in the quarter to roughly $25 billion.

While the report don't say why or how Metlife's Variable Annuities business is growing, a regional sales manager from Metlife said Primerica sells more variable annuities than Metlife's sales force. Its no shock to me. Primerica has the largest securities licensed representatives in North America. I believe Metlife's Prime Elite variable annuities is the best kind of variable annuity out there with its low fees and guaranteed features associated with it such as guaranteed growth for several years and access to hundreds of mutual funds.

I have sold a few variable annuities by either doing a 1035 exchange with a cash value life insurance policy or a 1035 exchange with a variable annuity. My parents once owned a variable universal life insurance policy. One policy with $30,000 coverage had about $8,000 in net surrender cash value and the other policy with $100,000 coverage had $15,000 in net surrender value. Their total annual premium for a total of $130,000 coverage was $2400. Both of them bought this life insurance policy when they were 40 years old.

At the time I sat down with my parents (both at age 56), I found out they were under-insured, meaning they didn't have enough coverage to cover their financial needs. I gave each of them a 20 year term with $100,000 coverage each for a total of $200,000 coverage. They had health issues and rated "non-tobacco" instead of "preferred", so their annual premium is $1621/year. If they bought the 20 year term when they were 40 years old (they were healthy back then), it would of cost them $299/year, saving them $2101/year. If they invested the difference for a period of 16 years (from age 40 to 56), they would of have about $87,000 in their account at a 10% rate of return. In their variable universal life policies, they only had about $23,000. That's almost a $64,000 difference!

After the term policy was issued, I did a 1035 exchange with their variable universal life policies and moved the cash value into a variable annuity. My parent's original retirement plan was relying on social security and government programs, if they even qualify for government assistance. I did not want my parents to retire poor and downgrade their life style. Besides opening variable annuities for them, I also open a Roth IRA for both of them. They both plan to retire at age 64, so they only had another 12 years to invest. Both of them invest $300/month into their own Roth IRA (a total of $600/month) and with a 8% return (because they are conservative investors), each of them would have about $72,600 in their retirement account for a total of $145,200. $145k is not alot of money to retire on, but at least its something. Plus, they don't pay any taxes on this and all withdrawals are tax-free because that's how a Roth IRA works.

Anyway, so their new retirement plan now includes social security, income for life from their Metlife's variable annuities, and their Roth IRA and from me who is currently earning over $90,000/year and soon to earn over $100k/year with no stop in sight. This is why I love Primerica. Helping families, building a business, having freedom, and being able to support your loved ones with no worries about money. Everyone who is in Primerica has the same opportunity, but it requires hard work, small sacrifices, and focus to achieve these goals.

Thursday, July 23, 2009

The good will overcome evil

I was thinking to myself and was wondering why is Primerica not affected by certain circumstances such as the recession while many other companies are taking a hard hit? The answer is simple, Primerica does the right thing for their clients. "When you do the right things, events don't overtake you. You overtake events."

For example, lets take a look at the mortgage industry. Many mortgage companies got involved in selling exotic mortgages such as Adjustable Rate Mortgages in the past few years. While it generate lots of profits for those companies for a short period of time, many of those companies are now gone or have been bail out by the government. Guess what? They are partly to blame for the economic mess that the world is in right now. At Primerica, they stood by one type of loan and that's a fixed rate loan. Of all the clients in Primerica who own Primerica's SMART loan (which stands for Save Money And Reduce Taxes) during the past 10 years, less than 0.7% of them ever foreclosed their home. Primerica's SMART loan business continues to grow while many other companies doing mortgages continue to struggle to survive.

Some of you are asking what about Citigroup? Yes they received government bailout money, but there's no connection between Primerica and Citigroup. The only connection between these two companies is that Citigroup takes some of Primerica's profits. Citigroup doesn't pay for any Primerica's expenses or any other companies that are part of Citigroup. Think of Citigroup as one big financial supermarket. A supermarket sells all kinds of stuff. But does the supermarket pay for the expenses of making those products or pay those employees or expenses of those companies? No. They earn money by selling those products. To me, its kind of a sucky deal to be part of Citigroup. There's been lots of chatter about Citi trying to sell Primerica and I hope someday that day will come true. But in a shaky economy we are in right now, I don't think any company is willing to pay about $7.5 billion to buy Primerica right now. Believe me, there's lots of companies out there that is interested in Primerica, just that its not the right time.

Now, lets take a look at the life insurance industry. Primerica is member of the "Insurance Marketplace Standards Association, a self-policing compliance group established by life insureres. In January 2000, there were 241 members. In May 2009, there were only 88 companies. It proves one thing that Primerica continues to do what is right for their consumers. Primerica lowered their rates in the year 2007 and many companies did the same. But when the going get tough and companies need to generate more money, they need to raise their rates or reduce the number of agents. At Primerica, they kept their rates the same and the sales force continues to grow. There's no company out there that can compete against Primerica.

The bottom line of my message. Good companies that do the right thing will strive and get stronger and companies that takes advantage of people will fall or be affected by economic conditions. Primerica been in business for over 30 years and the company continues to get bigger and stronger, even during rough economic times.

Saturday, July 18, 2009

I love Primerica

I just want to say that I love Primerica for: me the opportunity to grow and build my business on my own terms.
...the opportunity to earn any amount of income I want to earn.
...the tools I need to grow my business
...the ability to educate and help families that desperately need our help.
...the unbelievable support system. Without it, I will be lost.
...putting together big events such as conventions and the most recent Builder's Summit they held in the past month.
...having awesome Co-CEO's John Addison and Rick Williams for putting so much love, support, and excitement into the company.
...being able to listen and learn from all the great leaders in Primerica.
...doing what is right for families 100% of the time.
...being a motivation in my life. Its not the company that motivates me, its the people in it from the employees who process all my paper work and answering all my questions to the great business leaders like Keith Otto, Frank Dillion, Jimmy Meyer, Bob Safford and many more, to the top executives of Primerica. One big company where everybody is heading in the same direction of growing big and doing what is right all the time and get more people to financial independence.
...for being able to bring new technology that I could use.
...for the amazing financial education. Without the education, I would still be putting all my money in a savings account and not invest a single cent in the stock market. I would probably be sold on whole life or universal life or whatever expensive crap these money-craving life insurance vultures are selling. With the education and guidance, I'm expected to be financially independent by the time I'm 50 years old just by investing. Factor in the income I earn from my business, I can be financially independent by the time I'm 40 years old or earlier.

Thank you Primerica for this amazing opportunity!

Tuesday, July 14, 2009

Why majority of the financial industry hates Primerica

This is just a theory, but I was thinking to myself about the difference in philosophy between Primerica and the rest of the industry. Primerica helps families by educating them, while the rest of the industry sells products that may or may not make any sense to the client. Take a look at this:

Primerica shows people how to get out of debt by educating people that they can control how long they can be in debt. Banks on the other hand, advertise interest rate like crazy, which keeps people in debt for a very long time. There's a simple mathematical formula where Total Interest = Principal x Rate x Time. Banks control the interest rate, but you can control the time. Its not the interest rate that will get you out of debt, its the rate at which you pay. If you were able to pay off your debt faster, that reduces your total interest, which then gives you the net effective interest rate.

Primerica educates people to keep life insurance and savings separate by "Buying term and invest the difference." The entire life insurance industry sells whole life or universal life insurance, which bundles your life insurance and savings together. Since when should people trust insurance companies with their savings? You only have the need for insurance if:
1) It is required by law to have it (such as auto insurance).
2) You don't have lots of savings right now, so you need insurance in case something happens. In other words, insurance is a financial tool that can provide income to you or your beneficiary (depending on the type of insurance) when a major event happens such as your house being caught on fire and homeowner's insurance will cover the damages OR you die, and life insurance will provide income to your beneficiary.

Primerica helps people invest their money for as little as $25/month or $50/month and get on the road to financial independence. Big investment companies will tend to ignore anyone who has less than $100,000 to invest. In fact, some say go to their website and invest online, but you have to pick on your own and where to invest. Primerica provides guidance on where you should put your money.

Primerica does a customize, confidential, and complimentary Financial Needs Analysis (FNA), which is a financial tool or financial guide to help you reach your financial goals. Many companies will charge you anywhere between $500 to $2000 or more.

At Primerica, they do what is right. I believe this is the main reason why the rest of industry don't like Primerica because they want to take in as much profits as possible by selling very expensive products. But Primerica's profits continues to grow because they do what is right 100% of the time.

Friday, July 3, 2009

Oh the truth hurts!

The last post I made really made several agents of the PRO-cash value life insurance really mad and pissed off. Some say its all lies and untrue. Some say its illegal to write that. Some say I should have my license taken away. First of all it is all true since it says so in the life insurance policy. I don't make this stuff up. I read over 500 different life insurance policies and they basically say the same thing (in less or more words). Are they saying that a life insurance policy has no truth behind it and what they (the agent) is saying is true? If that's so, then who should really lose their license? The agents who are ripping people off or honest person like myself who cares about the client's financial situation?

I know what my clients are going through and how tough it is to live in America. Middle income families such as myself have to work very hard just to get by in life. We have bills to pay and debt always seem to follow us wherever we are. We're not too sure about our future. Most of us don't even know if we will ever be able to retire. But I have solutions to all these financial challenges. There's always different ways to earn more income legally. One way is to look at the Primerica's business opportunity. Another way is to get a 2nd job. As for debts, I have several different programs that can get people out of debt in less time and save them tens of thousands of dollars toward interest payments. As for retirement, its good idea to start now and there's several investment plans where your money can grow tax-deferred. Do you honestly think that life insurance agents really care about your financial needs? They only care about how much you can afford and how much commissions they can make. After that, you probably will never hear from them again.

As for being illegal to write it, it is legal since I have the right to write it and there's nothing you can do about it.

Thursday, July 2, 2009

Another look at life insurance

Its a fact that any life insurance that builds cash value is a ripoff and should be a scam. Generally how cash value life insurance works is that your premiums are paid for two parts in the policy, which is the insurance and the cash value. The fact that these types of life insurance have more than one parts to it should be a red flag to you. After all, look at the other types of insurance out there such as auto insurance or homeowner's insurance. Why is that only life insurance builds cash value and the other types of insurance don't?

Cash value life insurance policies are very expensive. If you own it, you will realize that you have pay lots of money for a very low coverage. An average 30 year old with $100,000 coverage will pay about $1000/year.

Many life insurance agents or financial advisors may tell you that life insurance is a great way to save for your kid's education or a great way to save for retirement. If you keep the policy long enough, you can take out the cash value. But did you know that when you take money out, that you are borrowing your own money? Did you also know that the company has the right to deferred you loan up to 6-9 months? That means, they put a hold on your loan request. When you get the money from the cash value, the insurance company will charge you a loan interest of anywhere between 5-8%! And when you pay the loan back, the interest portion of the payment does not go back into the cash value. It is kept by the insurance company as profits. If there is insufficient cash value in the policy, your policy is in high risk of being lapsed. If this happens, all that loan you have taken out will now have to be reported to the IRS and you will pay income tax on that loan. If you die while there's a loan balance due, the loan balance plus interest plus and missed premiums will be deducted from the death benefit. For example, if you had $100,000 coverage and there's a $20,000 loan and you die, your beneficiary will receive less than $80,000.

People selling this garbage may also say its a great way to build tax-deferred savings! FACT: There is no life insurance policy out there that has done better than a 5% rate of return. FACT: It only grows tax-deferred because the total amount of premiums you paid is always greater than the value of the cash value. How do you pay income tax on a loss of return? You don't! But if somehow the cash value is greater than the total amount you paid, your life insurance policy will be considered a "Modified Endowment." This means that any growth on the cash value will be subjected to income tax and that the death benefit will also be subjected to income tax to the beneficiary.

Let's say you paid all your premiums on time and never taken a loan out and then someday, you die. All the cash value in the life insurance policy will be kept by the insurance company while your beneficiary will only receive the death benefit.

You are probably wondering why anyone would want to own a cash value life insurance? The main reason is that they don't understand how it works and the person selling it makes this type of life insurance very attractive to the buyer. When the client receives the policy, majority of them never read it.

The solution: Buy pure life insurance that doesn't build cash value, which is Term Insurance. Term insurance can provide you lots of coverage for a low amount of premium. An average 30 year old with $100,000 coverage will pay about $600/year (compare to the $1000/year for a cash value life insurance).

Since it doesn't build cash value, you have the opportunity to save your money wherever you want. Whether its in a safe , inside your home, at the bank, or at any financial institution, you have easy access to your money. There's no such thing as "borrowing" (unless you have a 401(k) and you want to borrow from that. But at least the interest portion you pay goes into your investments, not to the investment company).

If you do the smart thing with your money by investing it in the right mutual funds, you will achieve a higher rate of return than any cash value life insurance policy. There's many mutual funds out there that has done a 10% or greater return in the past 10 years, even during all the tough times in the economy in some of those years.

If you die during the term, your beneficiary will get the death benefit. All the savings you built up will be paid to your spouse or family members. (Its always a good idea to have a Will setup for yourself so that your assets is properly distributed to the right person(s)).

If you live to the end of the term, you have options on what to do next. If you believe you still need life insurance, then you can renew the term for another one to 5 years, regardless of your current health conditions. You may be able to do a policy exchange into another term policy, but proof of insurability maybe required (depending on how much coverage you are asking for). Or you can cancel the term policy and save the money for retirement.

If you die after the term is up, at least your family will receive your savings. If you buy term and invested your money since the start, that could be lots of money for your family. If you invested $400/month for the next 30 years and the average rate of return was 10%, you will have $911,730.

Keeping life insurance and investments separate just makes sense, doesn't it?