Primerica Life Insurance Company: The Truth about Primerica

There are two ways to discover the financial stability of your life insurance company: (1) die; (2) research the company's financial strength. I prefer the latter (if you prefer the former, you may not want to mention it when applying for coverage).

A.M. Best, a full service credit-rating organization, has given Primerica a superior (A+) financial rating. According to Reuters, A.M. Best bases its rating on Primerica's "leading position in the U.S. term life insurance marketplace, strong risk-adjusted capitalization and favorable liquidity profile,"* which in English means if you die, they have the money to pay.

Primerica Life Insurance Company is a subsidiary of Citigroup. Because of Primerica's profitability and Citi's need to raise capital, there is a likelihood Primerica could be sold in the near future; this, however, is no reason for policy holders--present and future--to be concerned.

*The full article regarding the truth about Primerica's financial strength is available at Reuters.

Life insurance policies don't exactly qualify as fun reading. Most people when they buy life insurance have no idea what they're getting. There's a reason for this. Most life insurance companies don't want you to know what you're getting. Primerica, on the other hand, keeps it simple.

Primerica sells only term life insurance. If you're looking for cash value insurance, go elsewhere (but read this first). Policies range from 10-year term to 35-year term. All Primerica policies are level premium/level term, which means the monthly premium stays the same throughout the term of the policy. Primerica policies automatically come with a terminal illness clause, which allows the policy holder to receive a portion of the death benefit in case of a terminal illness. Most policies can be renewed without a medical examination when the term expires (premiums will increase based on age at renewal).

Here's the truth about Primerica: because it only sells one type of insurance, consumers need not fear the unethical practices of insurance companies of the past. These unethical practices include the implosion of cash value life insurance policies and the bait and switch approach--the agent sells you a crappy term policy, increasing term, for example, and after you complain he persuades you to buy cash value life insurance.

An important part of any purchase, be it life insurance or toe nail clippers, is cost. A criticism of the company in the past has been its high premiums. Within the past several years, Primerica premiums have been reduced considerably and are now extremely competitive.

Shop around.

One of the more interesting (for those who find life insurance interesting) aspects of Primerica Life Insurance Company is its agents. The company aggressively recruits, not Wall Street techno-wizards or Insurance gurus, but part-time, average, middle-class Americans. Primerica's hiring practices have been criticized by some (its competitors) because of its high agent turnover. Hiring part-timers and average Joes (and Janes), however, is in line with the company's philosophy of keeping things simple for the consumer.

If you wish to purchase life insurance through Primerica, it must be done through an agent, contact information can be found at the company's website. In addition to answering questions about life insurance, your agent can provide you with a free financial needs analysis to help you get out of debt, pay off your mortgage faster, and save for retirement--many agents are licensed to sell mutual funds and can help you start a Roth IRA, a 403 (b), a 529 College Savings Plan or a self-employed retirement plan.

The truth about Primerica: they just might have a solution for you.