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.

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