Mark’s Question
Byron,
Would you yourself renew a policy with AIG? My concern is the same as Amy’s. Is it best to seek out a new company for a similar term policy or stick with AIG and hope they survive and will pay surviving members? The other bad feeling is paying a policy and realizing that many execs within the company are getting paid excessive bonuses. Seems like the Insurance costs could be reduced if this wasn’t considered standard practice. Who is the best rated Insurance Company now…in your opinion?
Sincerely,
Mark Palsha
March 24th, 2009 at 4:15 pm
Byron,
Thank you for taking the time to develop your video response and for providing your personal and professional insight into AIG life Insurance. This was very helpful.
Sincerely,
Mark Palsha
February 3rd, 2010 at 2:20 am
Byron,
What is your feeling on Primerica Life Insurnace Co.? I’ve heard that it is the largest term life insurance company in North America. Is this true? What other information might you be able to share on this company?
Thanks,
Scott
February 4th, 2010 at 1:33 pm
Hi Scott,
Primerica is a VERY large “multi-level” organization (similar to Amway) that sells financial services, including life insurance. They have a boatload of licensed agents, the VAST majority of them part-time. Last I checked, they had approximately 100,000 licensed agents, each of whom sells an average of LESS than 3 policies per YEAR. Not exactly an “experienced” field force! They generally prey on unsophisticated prospects, mostly friends and family of the agent, who will not likely shop around and discover their products are not competitive. Once they get past their brother, sister, and their best friend, they find that the marketplace is not all that receptive for a pitch to sell uncompetitive products. They specifically discourage their agents from obtaining any of the industry standard education (such as CLU, and ChFC designations from the American College), as perhaps they fear that they will be exposed for what they are. Plain and simple: Their products are overpriced and a poor value relative to the benchmarks in the industry. Specific examples of the lack of competitiveness in their product portfolio:
1) At age 40, their best rate on a perfectly healthy non-smoker for 20-year level term is $475 per year, or $45.13 per month. Compare that to the industry benchmark at $360 per year and only $31 per month.
2) Their 30-year “level” term plan is one of the few on the market WITHOUT a full 30-year rate guarantee. So, despite the product’s name (Custom Advantage – 30 year… sounds good, right?) it might turn out to be “level”, but then again, it might not. This product is also significantly more expensive than the competition in the 30-year term arena, most all of which provide fully guaranteed premiums for 30 years.
3) Their “modal” factors are outrageous for the most commonly used modal payment… the monthly mode. For each $1000 of annual premium on their term life plans, their monthly “factor” is .095, which means that you’d pay $95 per month for a policy that would have cost $1000 if you paid once a year. The effective APR (interest rate) you’ll pay, for the privilege of paying monthly is a whopping 29.7 percent! The sad thing is, MOST people pay monthly! Ouch!
The ironic side of this story is that their agents generally approach their prospects promising to rescue them from all the other financial services companies that they claim are ripping off the customer! Amazing.
Byron