• Report: #127284

Complaint Review: Primerica

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  • Submitted: Thu, January 13, 2005
  • Updated: Sun, September 17, 2006

  • Reported By:New Carlisle Ohio
Primerica
Coldwater, Ohio U.S.A.

INVESTIGATION: Primerica offers excellent business opportunities & stands behind its products & services, feel confident & secure when doing business with Primerica, backed by Rip-off Report's Corporate Advocacy Business Remediation & Customer Satisfaction Program. Coldwater Ohio
*UPDATE: Primerica offers a good business opportunity & stands behind its products & services- - Company Executives have told Rip-Off Report that Primerica pledges to resolve complaints & address any inquires from the past, present & in the future.

*UPDATE Employee: Licensed Agent with Primerica

*UPDATE Employee: Licensed Agent with Primerica

*UPDATE Employee: Licensed Agent with Primerica

*UPDATE Employee: Licensed Agent with Primerica

*Consumer Comment: Another ineffective rebuttal, try again my friend!

*UPDATE EX-employee responds: Timothy - You're a Fool - You're complex financial arrangement is the basis of the LIES told to America by The Airline Industry, General Motors, Enron, Worldcom, innumerable dotcoms, Citicorp, Primerica, etc.

*UPDATE EX-employee responds: Timothy - You're a Fool - You're complex financial arrangement is the basis of the LIES told to America by The Airline Industry, General Motors, Enron, Worldcom, innumerable dotcoms, Citicorp, Primerica, etc.

*UPDATE EX-employee responds: Timothy - You're a Fool - You're complex financial arrangement is the basis of the LIES told to America by The Airline Industry, General Motors, Enron, Worldcom, innumerable dotcoms, Citicorp, Primerica, etc.

*Consumer Comment: Nothing flawed in my analysis

*Consumer Comment: oops - I had A and B reversed above. ...Primerica product that looks like a better deal at first, but it isn't.

*Consumer Comment: Loan A and B comparison - a deceptive practice.

*Consumer Comment: Response to Economic Theory of the Time Value of Money

*UPDATE EX-employee responds: Lynn - You're Doing it Correctly - I was scammed by Primerica because I didn't heed my instinct for getting the facts.

*Consumer Comment: The time value of money

*Consumer Suggestion: Dennis's top complaint here is right on the money. He understands exactly what these frauds are doing to America.

*UPDATE EX-employee responds: Hear's the real truth about your APR vs. Note rate.

*UPDATE EX-employee responds: Comparison by pfs is not apples to apples ..use their pay off strategy but do it with a less expensive mortgage and save even more.

*Consumer Suggestion: To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

*Consumer Suggestion: To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

*Consumer Suggestion: To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

*Consumer Suggestion: To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

*Consumer Suggestion: Paul In Brooklyn Thanx For Being Fair

*UPDATE Employee: A little bit of info on APR. ..To all you who make your decisions via APR only, you are ripe for the plucking, and you will be ripped-off by the mortgage industry.

*UPDATE Employee: Primerica Makes the Right Comparison 100% of the Time!!

*Consumer Comment: Make a proper comparison.

*Consumer Suggestion: To Dylan Just What Is Your Definition of APR?

*UPDATE Employee: Primerica Bad Products? The Real Truth!

*Consumer Suggestion: Primerica products are simply a bad deal.

*UPDATE Employee: The Truth About Primerica re: lernding, insurance, etc!!!

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EDitor's Comment: Rip-off Report Investigation: Primerica gets a POSITIVE RATING in customer support from Rip-off Report and is fulfilling its commitment to provide excellent customer service. Primerica pledges to resolve complaints and address representative issues. For a long time this EDitor had concerns about Primerica because of the number of Reports about them. For many months Rip-off Report was looking into the company, even before they contacted us to resolve any issues and mostly misunderstandings being posted by competitors. With over 100,000 representatives and 6 million clients, Primerica is bound to be the subject of a certain number of complaints about improper agent conduct, as well as product and administrative complaints. Rip-Off's investigation found such complaints, but importantly also found that Primerica is committed to resolving such complaints quickly and doing everything possible to satisfy its clients. It also takes appropriate action against any of its representatives who are found to have conducted themselves improperly or unethically. We believe that the number of complaints against this company, whether through the Internet or other channels, is small when put into the context of its enormous size. Most big companies would never commit themselves like Primerica has. Read our investigative Report and Primerica's commitment to 100% consumer satisfaction. www.primerica.com provides products and services through independent representatives. Primerica www.primerica.com has more than 100,000 licensed representatives who serve more than 6 million clients in the U.S., Canada, Puerto Rico, Spain and the United Kingdom. Through a Financial Needs Analysis www.primericafna.com, the companys representatives provide a snapshot of a familys financial picture and suggest a strategy for financial security via Primericas products and services www.primericafinancialsolutions.com. Primericas business opportunity is attractive to people from many different backgrounds, including women www.womeninprimerica.com, African-Americans www.primericaaalc.com, Hispanics www.primericalatino.com and young adults www.generationprimerica.com.


Primerica deceptive lending practices and other con jobs RIPOFF Coldwater Ohio Almost everyone I have ever met is familiar with the pyramid profile of the agencies of Primerica and how they deliberately go after sound permanent insurance plans of other companies, including their own policies written by their parent company, the Travelers Group. What many don't know is that their term policies are more expensive than those of the companies they seek to replace and they are not convertible into permanent insurance when the client is ready to retire. I have never know older folks with a large estate who did not use and need permanent insurance to meet their estate planning needs and for other reasons, such as charitable giving, etc. Anyway, my wife is a real estate agent and she also on the side does about 5 to 10 "repo" appraisals a week for area banks as people seek to refiance or are facing foreclosures. She has found almost half the foreclosure actions in our region (north Dayton, OH region) involve expensive loans that were written through Primerica agents. Yes, the MAIN goal is not the insurance - the agents make little selling their worthless and expensive term plans, but in the refinancing of debt, which is usually at a rate far higher than anyone could get just by going to their local bank or mortage company. Once all the "wood" is removed by the termite agents of Primerica, the clients are left with an expensive mortgage, no permanent life insurance, dubious investments and nothing left to hang their hats on. Once they go back to charging and debt production, they are soon upside down, have no permanent insurance plans to borrow on, or equity in their mortgage and their investments have gone south. Result, they are forced into near bankruptcy. Left alone, most of these people would have stayed out of trouble. The Primerica agents, zealots to the man or woman, are all part timers and usually only last a few months in the business before being totally shunned by coworkers, family and former friends! The sad thing, by then, they have ruined many nest eggs of the families they have "helped" in the very loosest sense of the word. The only thing I have ever seen that is about as stupid is the Amway pyramids, where you can get up to a thousand poor souls hawking inferior and overpriced products to each other in the same county!! At least with Amway, the damage is confined to having a lifetime supply of soap in the garage and being embarressed the rest of your life by friends and family. With Primerica, the damage is much deeper and has much more severe consequences. Why aren't the insurance commissions of the various states on top of this group? Why ??? Dennis New Carlisle, Ohio
U.S.A.

This report was posted on Ripoff Report on 01/13/2005 07:06 PM and is a permanent record located here: http://www.ripoffreport.com/r/Primerica/Coldwater-Ohio/INVESTIGATION-Primerica-offers-excellent-business-opportunities-stands-behind-its-produ-127284. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

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Updates & Rebuttals

#1 UPDATE Employee

Licensed Agent with Primerica

AUTHOR: Dave - (U.S.A.)

I am a licensed agent with Primerica Financial Services. I am amazed to see how little these people think of Primerica. It is very apparent that the people who make negitive remarks or complaints on Primerica know very little about the company and what we stand for. This company's ethics are outstanding.



It is also very apparent that they are infected with what we call the middle class mind set. We don't think that people who choose other career opportunities are losers, and if our company has been presented to you in that way I give you my deepest apologies. Who ever you spoke with obviously misrepresented our company.



I would be happy to sit down with any one of you and show you how our Insurance policies, our Financial Analysis, our investment vehicles, and yes, even our career opportunity will out perform just about anything that is out there.



We are in the business of changing lives for the better and I'll take anyone's challenge on any one of our services, at any point in time. We do what is right for the customer 100% of the time.



I am proud to be a part of Primerica Financial Serives. I myself have helped people change their lives for the better, and when you have those people come to you and thank you for helping them, that's when you know your doing something right. That's when you know your making a difference.
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#2 UPDATE Employee

Licensed Agent with Primerica

AUTHOR: Dave - (U.S.A.)

I am a licensed agent with Primerica Financial Services. I am amazed to see how little these people think of Primerica. It is very apparent that the people who make negitive remarks or complaints on Primerica know very little about the company and what we stand for. This company's ethics are outstanding.



It is also very apparent that they are infected with what we call the middle class mind set. We don't think that people who choose other career opportunities are losers, and if our company has been presented to you in that way I give you my deepest apologies. Who ever you spoke with obviously misrepresented our company.



I would be happy to sit down with any one of you and show you how our Insurance policies, our Financial Analysis, our investment vehicles, and yes, even our career opportunity will out perform just about anything that is out there.



We are in the business of changing lives for the better and I'll take anyone's challenge on any one of our services, at any point in time. We do what is right for the customer 100% of the time.



I am proud to be a part of Primerica Financial Serives. I myself have helped people change their lives for the better, and when you have those people come to you and thank you for helping them, that's when you know your doing something right. That's when you know your making a difference.
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#3 UPDATE Employee

Licensed Agent with Primerica

AUTHOR: Dave - (U.S.A.)

I am a licensed agent with Primerica Financial Services. I am amazed to see how little these people think of Primerica. It is very apparent that the people who make negitive remarks or complaints on Primerica know very little about the company and what we stand for. This company's ethics are outstanding.



It is also very apparent that they are infected with what we call the middle class mind set. We don't think that people who choose other career opportunities are losers, and if our company has been presented to you in that way I give you my deepest apologies. Who ever you spoke with obviously misrepresented our company.



I would be happy to sit down with any one of you and show you how our Insurance policies, our Financial Analysis, our investment vehicles, and yes, even our career opportunity will out perform just about anything that is out there.



We are in the business of changing lives for the better and I'll take anyone's challenge on any one of our services, at any point in time. We do what is right for the customer 100% of the time.



I am proud to be a part of Primerica Financial Serives. I myself have helped people change their lives for the better, and when you have those people come to you and thank you for helping them, that's when you know your doing something right. That's when you know your making a difference.
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#4 UPDATE Employee

Licensed Agent with Primerica

AUTHOR: Dave - (U.S.A.)

I am a licensed agent with Primerica Financial Services. I am amazed to see how little these people think of Primerica. It is very apparent that the people who make negitive remarks or complaints on Primerica know very little about the company and what we stand for. This company's ethics are outstanding.



It is also very apparent that they are infected with what we call the middle class mind set. We don't think that people who choose other career opportunities are losers, and if our company has been presented to you in that way I give you my deepest apologies. Who ever you spoke with obviously misrepresented our company.



I would be happy to sit down with any one of you and show you how our Insurance policies, our Financial Analysis, our investment vehicles, and yes, even our career opportunity will out perform just about anything that is out there.



We are in the business of changing lives for the better and I'll take anyone's challenge on any one of our services, at any point in time. We do what is right for the customer 100% of the time.



I am proud to be a part of Primerica Financial Serives. I myself have helped people change their lives for the better, and when you have those people come to you and thank you for helping them, that's when you know your doing something right. That's when you know your making a difference.
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#5 Consumer Comment

Another ineffective rebuttal, try again my friend!

AUTHOR: Timothy - (U.S.A.)

Doug, I think you grossly misunderstood my statements. First of all, I am not defending Primerica. In fact, I am arguing against their program. If you failed to understand that, how can I fathom that you understood the rest?



The "borrow to invest" thing was used as a vehicle to show a larger point, not to advise people to actually do so, although they could, and people often do, with great success. I thought it was a simple way to illustrate a broader point, but apparently I was mistaken, and detractors have focused on the pragmatics of the example rather than the substance of the discussion. The use of this tactic tells me that you either didn't understand what I was saying (which could be my own fault) or are incapable of presenting an effective rebuttal to the larger point, which was this: the total cost analysis is flawed because it ignores the benefit of duration. It's that simple. Can you argue against that? If not, then you're not really rebutting me.



Additionally, the people who have argued against me on this valid point (borrow to invest) assume that securities are the only form of investment available. Securities are a limited class of investments, with a specific definition that does not encompass other investments. If you think that securities are the sole investment vehicles available to the public, then please study up a bit before trying to challenge my assertions.



FURTHERMORE my theory is not a pie-in-the-sky dreamed up by unscrupulous purveyors of shoddy investments. It is reflected in GAAP (ever heard of those?) as well as in the Internal Revenue Code. In fact, it is the whole basis of our investment economy!



I don't need a spreadsheet to illustrate a mathematical certainty. Let's compare a couple of loan packages again.



Loan A: Principal - 100k; APR - 7%; Duration of loan - 15 years; Payments - $899/mo; Total cost -$161,788.



Loan B: Principal - 100k; APR - 7%; Duration - 30 years; Payments - $665; Total cost - $235,911.



There is roughly a 74k difference in total cost, favoring loan A. BUT, the debtor in loan B has $235 more per month to invest than the debtor in loan A, for the first 15 years, and in years 16-30 the debtor in loan A has $665 more per month to invest than his counterpart. But he had nothing to invest during the first 15 years, while debtor B's investment wealth was increasing.



To put it simply, debtor A is investing $900 in years 16-30 ($900 per month for fifteen years, for a total of roughly $162,000) and debtor B is investing $235 in years 1-30 ($235 per month for thirty years for a total of roughly $84,600). The Primericans would go for loan A because it is paid off sooner, has a lower total cost, and allows for double the investments. Sounds great, right? You can see why the average consumer, and the average Primerican, would like loan A. But, if the rate of return exceeds the APR, their preference is misplaced.



Now, while reading the following, you MUST recognize that debtors A and B have THE SAME out of pocket expenses.



Assuming an 8% rate of return (which represents only a 1% favorability compared to the APR on the loan, change the figures however you want and it will still work so long as there is a 1% difference), debtor A's investment portfolio in year 31 will be worth roughly $316,700 and debtor B's will be worth roughly $344,494. Loan B, for the extended duration, represented a wealth advantage of $32,000. Do the math yourself if you wish, let's compare numbers.



They have each paid out the same amount of money. There's no voodoo here. Debtor A and debtor B have both paid a total of $324,400, $900 per month over 30 years, with differing respective amounts going toward loan servicing and investments.



Over the course of the 30 years, A's investments surpassed B's investments by almost double. But B has been investing for double the duration.



At year 15 B already has a portfolio valued at roughly $83,000, funded by the $235 per month difference in payments, and this quantity will mature to $262,000 by year 30. At that same point, where B already has a $83,000 portfolio, A is only able to invest the $900 per month that he isn't using for loan service (and has no relevant portfolio), and B is still investing his $235 per month. B's portfolio, at the end, is worth about $32,000 more than A's, even though A put more of his money into investments and B more into loan servicing. And, recall that A and B both expended the same amount of money, so this is NET; there is nothing to subtract.



Now, this is an incredibly simplified analysis, and doesn't take inflation, taxes, or varying markets into consideration. Inflation actually improves the viability of loan B because the payments that will be made 30 years from now are made with less valuable dollars than the payments made before that point. Assuming a 3% rate of inflation, the present value of a $665 payment 30 years from now is less than $250 (the present value of a $900 payment 15 years from now is $577). But inflation affects all of the variables equally, so eliminating it from the consideration is appropriate. Assuming that we're talking about a qualified mortgage, Loan B is tax favorable to loan A because debtor B can take $74,000 more in interest deductions.



And, of course, markets will vary, but I am only assuming a rate of return 1% greater than the APR, which is by no means unrealistic if you have a decent APR. If you don't have a decent APR, then the Primerica plan is probably right for you.



The bottom line is that the total cost analysis is flawed insofar as it fails to take the benefit of duration into account. That was the whole basis of this discussion. I'm not trying to dish out investment advice, or to say that the Primerica products are fundamentally flawed. I'm merely trying to illsutrate that a one-size-fits-all financial will inevitably NOT be the best option for many clients.



If you take a client out of a legthy loan with an APR below a reasonably expectable rate of return, and put them into a loan with a shorter duration but without a lower APR, then you are not doing them any kind of good service. Ceterus Paribus, If the APR is favorable, then the loan that is paid off over a greater period of time is the way to go.



The respone I seem to be getting on this analysis is "nobody actually does this" (referring to taking the difference between loan payments and investing it). Ironically, the people telling me that the debtor WON'T invest the difference are the same people who are advising clients to "buy term and invest the difference." Why does this theory only apply to life insurance? Could it be because the theory is a benefit when applied to term life insurance, but a detriment when applied to the marketing of short duration loans?



I would be happy to see some MATH that proves me wrong, and would willingly admit my fault. I'm no expert on this stuff, I'm not in the financial field, and my background is neither in finances nor economics. But I did stay at a Holiday Inn Express last night.



Thus far I have seen no math, no direction to outside expert analyses, nothing. Just rhetoric coupled with questionable credentials. Put up or shut up!
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It's infinitely better to have ONLY interest-earning investments than to have some combination of interest-earning and interest-charging investments for at least three simple reasons:



REASON 1: Have you ever heard of REPOSSESSION/FORECLOSURE? Miss a payment, lose your house.



REASON 2: It's MUCH better to earn a straight-up 5% than to "earn" Primerica's BOGUS/DREAMLAND 10%+ MINUS the 5% you're paying on a mortgage. If the latter 10% were more solid, than the combination would be more arguable, but it's not.



REASON 3: If one PAYS OFF THEIR HOUSE IN 15 YEARS AT THE LOWEST MORTGAGE INTEREST RATE and then ONLY invests for the next 15 years, they're going to have $100,00 to $200,000 in REAL CASH that Primerica didn't rape them of.



You're complex financial arrangement is the basis of the LIES told to America by The Airline Industry, General Motors, Enron, Worldcom, innumerable dotcoms, Citicorp, Primerica, etc. You will never be able to prove your theory in spreadsheet form (or any other printed format) with REAL NUMBERS (or even any sort of legitimate math expressions) because it is a lie. "Borrow money and pay financial institutions tons of interest! You'll make more money in the long run with short-term profits that you'll reinvest." Yeah right. How about "Invest money and RECEIVE tons of interest (NOW)! You'll make interest income. May you fail in your efforts to cheat a wonderful country.
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It's infinitely better to have ONLY interest-earning investments than to have some combination of interest-earning and interest-charging investments for at least three simple reasons:



REASON 1: Have you ever heard of REPOSSESSION/FORECLOSURE? Miss a payment, lose your house.



REASON 2: It's MUCH better to earn a straight-up 5% than to "earn" Primerica's BOGUS/DREAMLAND 10%+ MINUS the 5% you're paying on a mortgage. If the latter 10% were more solid, than the combination would be more arguable, but it's not.



REASON 3: If one PAYS OFF THEIR HOUSE IN 15 YEARS AT THE LOWEST MORTGAGE INTEREST RATE and then ONLY invests for the next 15 years, they're going to have $100,00 to $200,000 in REAL CASH that Primerica didn't rape them of.



You're complex financial arrangement is the basis of the LIES told to America by The Airline Industry, General Motors, Enron, Worldcom, innumerable dotcoms, Citicorp, Primerica, etc. You will never be able to prove your theory in spreadsheet form (or any other printed format) with REAL NUMBERS (or even any sort of legitimate math expressions) because it is a lie. "Borrow money and pay financial institutions tons of interest! You'll make more money in the long run with short-term profits that you'll reinvest." Yeah right. How about "Invest money and RECEIVE tons of interest (NOW)! You'll make interest income. May you fail in your efforts to cheat a wonderful country.
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It's infinitely better to have ONLY interest-earning investments than to have some combination of interest-earning and interest-charging investments for at least three simple reasons:



REASON 1: Have you ever heard of REPOSSESSION/FORECLOSURE? Miss a payment, lose your house.



REASON 2: It's MUCH better to earn a straight-up 5% than to "earn" Primerica's BOGUS/DREAMLAND 10%+ MINUS the 5% you're paying on a mortgage. If the latter 10% were more solid, than the combination would be more arguable, but it's not.



REASON 3: If one PAYS OFF THEIR HOUSE IN 15 YEARS AT THE LOWEST MORTGAGE INTEREST RATE and then ONLY invests for the next 15 years, they're going to have $100,00 to $200,000 in REAL CASH that Primerica didn't rape them of.



You're complex financial arrangement is the basis of the LIES told to America by The Airline Industry, General Motors, Enron, Worldcom, innumerable dotcoms, Citicorp, Primerica, etc. You will never be able to prove your theory in spreadsheet form (or any other printed format) with REAL NUMBERS (or even any sort of legitimate math expressions) because it is a lie. "Borrow money and pay financial institutions tons of interest! You'll make more money in the long run with short-term profits that you'll reinvest." Yeah right. How about "Invest money and RECEIVE tons of interest (NOW)! You'll make interest income. May you fail in your efforts to cheat a wonderful country.
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#9 Consumer Comment

Nothing flawed in my analysis

AUTHOR: Timothy - (U.S.A.)

There was nothing flawed about my above analysis. I find it hard to beleive that someone eductated in finance and economics thinks that people don't borrow money to invest it. It happens all the time my friend!



If you buy a home for use as a capital asset, or even simply because you think it will appreciate significantly, then you have borrowed money for investment purposes. If you start up your own business, chances are, you are borrowing money for investment purposes. Borrowing to invest is not restricted to borrowing to purchase securities, which may be a rare activity. But I'll get to that later.



Here's the bottom line, that apparently wasn't taught to you: money in your hands now, invested properly, will be worth significantly more down the road; a future liability is less of a liability than an identical present amount owed.



A loan that is paid off over a longer duration has two effects. First, the debtor has more money in his hands now to invest. Over time, the value of those investments (hopefully) will increase significantly, more than offsetting the higher "total cost" of the loan. Second, significant portions of the liability are deferred for years down the road. Inflation during the interim will directly reduce the effect of the future liability on the debtor's bottom line.



If the debtor elects the shorter duration loan, and pays everything that he can to erase the liability, then he has no money to invest in the 10 years or so that he is paying off the loan. He starts investing larger amounts than he otherwise would have after that ten years is up, but has missed out on ten years of appreciation, which is quite significant.



All that you have done is shown how the time value of money doesn't comport with the Primerica plan and that, my friend, is the problem. You are offering a one-size-fits-all approach that is probably not the best option for most people. Granted, it may be the best option for some, especially the risk averse, but you shuold knwo better than to declare outright that debt is unconditionally bad, or that term life is the best option for everyone.



Now, you ask why I don't apply the time value of money to the whole vs. term issue. That's a very fair question. The theory is definitely a factor in the benefit of term life, a policy that I have never disparaged, just said that it isn't always the best option. I ask you, then, if the Primerica theory is "buy term and invest the difference," assumingly because the lower cost of term allows for this, which certainly seems like an application of the time value theory, why does Primerica not apply this same logic to a loan package?



It seems as though you are tossing your credentials out while using your knowledge in inaccurate ways to justify the inferiority of Primerica products. Responsibly managed debt can be a very strong part of a financial plan. Instead of telling people to get out of debt entirely, which I think is bad advice, especially when interest rates are so favorable, you should be telling them how to use debt effectively. If you didn't learn that in school, maybe you should have focused on one degree instead.
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#10 Consumer Comment

oops - I had A and B reversed above. ...Primerica product that looks like a better deal at first, but it isn't.

AUTHOR: Mike - (U.S.A.)

Loan B is the one written for 30 years for a total of payments of $20,000. Loan A would be the Primerica product that looks like a better deal at first, but it isn't.
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#11 Consumer Comment

Loan A and B comparison - a deceptive practice.

AUTHOR: Mike - (U.S.A.)

I'm going to keep this short. The problem I have is that the Primerican "financial advisers" won't tell a person who already has Loan A that they could accelerate the payments and pay it off in 10 years for less than $9000. Instead they try to sell them Loan B, using the flawed "total cost" comparison. This is a deceptive practice.
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#12 Consumer Comment

Response to Economic Theory of the Time Value of Money

AUTHOR: Matthew - (U.S.A.)

Timothy,



First, I hope you did not "pay" someone to teach you the time value of money. I have a degree in Finance with a minor in Economics and your "fundamental precept of economic theory" on the time value of money is seriously flawed.



I read another one of your posts concerning whole life insurance. I will assume that you are an life insurance agent? You stated that "whole life IS an investment". If I were you I would NEVER repeat that to a client because you and I both know that you do NOT need a securities license to sell whole life insurance and CANNOT under ANY circumstances represent the policy as an "investment"(Unless you want to lose your license).



Just curious, why don't you use the time value of money to determine whether Whole Life is better than Buying Term & Investing the Difference. I assume you also know that Employee Plans, Roth IRA's & IRA's also receive favorable tax treatment? Unless someone has MAXIMIZED ALL QUALIFIED PLANS and has extra money laying around their is no reason to waste the money in whole life policy because they can get a MUCH better rate of return investing the money in Qualified Plan. (eg. Roth - TAX FREE at withdrawal!) As for the need to pay estate taxes with insurance proceeds, the fact is that 95% of people will not have to worry about estate taxes because their estates will not exceed the exemption amount (1.5 million now, 3.5 million in 2009).



As for your discussion concerning Loan A & B. I agreed with the FIRST 4 paragraphs (except for last sentence of para. 4), but you lost it after that. Who do you know borrows money to invest it at your 7% ROR? People borrow money to buy cars, houses, junk, etc., NOT to invest it. OF COURSE you will have MORE money after 30 years than 10 years if you invest the $5000 proceeds from your loan at 7% - i.e. the "time" value of money. Your comparison does not factor the ability of the person who took the 10 year loan to INVEST the money for the remaining 20 years. You will be FAR better off after 30 years if you paid the loan off after ten and took the same money and invested it for 20 years.



The "WHOLE" concept is to get out of debt (stop paying others) and invest as much as possible for as long as possible. If you want to stay in debt for 30 - 50 years, go for! I will get out of debt and invest! That is what my finance degree taught me.
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#13 UPDATE EX-employee responds

Lynn - You're Doing it Correctly - I was scammed by Primerica because I didn't heed my instinct for getting the facts.

AUTHOR: Doug - (U.S.A.)

Fortunately for you - you did proceed wisely...based on getting all the correct facts first.



First, Paul from Brooklyn, NY states in earlier rebuttal "Lynn. A 4.75% APR sounds good and I would suspect that with today's rates I could not beat it. But I would still provide you with the numbers so that you can decide." Yeah, right. Not only would Paul NOT provide you with the numbers, NO Primerica agents are walking around with laptops so that they can punch in the numbers and compute Amortization Tables on spreadsheets for the purpose of comparing mortgages - NONE, and that includes Paul (the PFS liar) from Brooklyn, NY. (And I don't want to read any of this some clients are provided comparisons and some aren't nonsense. That's NOT why DECENT folk pay $199 to become recruits. DECENT people do not operate in the financial services industry by giving high-dollar customers the red-carpet treatment [including REAL comparisons of Amortization Schedules] and giving lower-income customers short shrift. They give ALL customers their best effort.)



As you certainly know, an amortization table is a schedule (alternatively: grid or table) of payments that a mortgage borrower could look at, in order to see that on September 1, 2005, they have to pay total amount $X which includes Principle, Interest, Taxes and Insurance.



If the borrower uses a spreadsheet, that person can examine the situation even more deeply. They might say to themselves Hmmif I pay $100 extra and ask for it to be applied directly to principal, how will that shorten (or otherwise affect) my loan? The spreadsheet would calculate the impact of that payment in fewer than two seconds (on a ridiculously slow, old, laptop computer). You would not have to be gotten back to in order to have any numbers provided for you.



That brings me to my second point. I was lied to in no uncertain terms about when I would receive my amortization table. My RVP didn't provide it. My District Leader didn't provide it. Citicorp Trust Bank's schedule of fees for services lists Amortization Table on it. It costs $10 (ten dollars). I requested it 27 separate times from Citicorp Trust Bank over a one-year period. It never came.



If these scam artists aren't even willing to show clients the mathematical basics for comparison, the client can forget about getting a proper representation of the competitive advantage of PFS over other lenders (there is NO competitive advantage). Feel free to see my other posts which describe a plethora of other horrible features of the $MART Loan. There are at least eight other *horrible* features.



Finally, I read (way too much) about how clients have the responsibility to do their own homework first. That idea is quite counterintuitive to me. I know, I knowthe ultimate responsibility for managing my finances IS solely minejust what is the purview of PFS reps in terms of education, guidance, advice or responsibility to ANYONE?
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#14 Consumer Comment

The time value of money

AUTHOR: Timothy - (U.S.A.)

It seems to me that the Primericans are missing a very fundamental precept of economic theory: the time value of money.



The value of a dollar held, or the liability of a dollar owed, is fluid and depends as much on duration as on face value.



It's really quite simple. If given the option of taking $10 today or $20 ten years from now, I take the first option. Assuming a favorable rate of return, my $10 will be worth more than $20 ten years from now, and I will have a net increase in wealth greater than if I had taken the $20 option.



I assume that the Primericans understand this, but what they don't seem to understand is that it works for liabilities as well as assets. Given the choice between having to pay $10 today or $20 ten years from now, the financially savvy will take the latter option. He wil take the $10, invest it, and end up with more than the $20 owed in year 10. The excess offsets the original obligation. The "present value" of the future debt could be somewhere around $5.



An analysis of the value of two separate loan packages is grossly inaccurate if it doesn't take the time value of money into account. For example, let's compare two loans for $5000. Loan A will require $10,000 in payments spread over 10 years. Loan B requires $20,000 in payments spread over 30 years. On the surface, and according to the apparent Primerica logic, it appears as though loan A is the better option. It probably is not.



At a 7% rate of return, the proceeds from loan A, invested for ten years, will earn about $5000, which covers the cost of the loan. The proceeds from loan B, similarly invested, will earn about $35,000 over thirty years. Loan B actually results in a net wealth increase of $15,000. Of course, this must be discounted to its preent value to find the true value, which will probably be around $2000.



So, then, the present value of the proceeds of loan A, which carried a much smaller payment obligation, is zero when offset by the repayment obligation. The present value of the proceeds of loan B is $2000, even though the total cost of loan B was double that of loan A.



Of course, loan B has a lower APR, and this is the source of its benefit. But loan A can easily be painted as favorable to loan B if the customer believes that APR is meaningless and he should look to the total cost instead. And, if the client can be manipulated to think that debt is inherently bad, all the better for the peddler of the inferior loan product. Consider this sales pitch: "The total cost of our A loan is half that of their B loan, and you will be out of debt in ten years, as opposed to their thirty years." Sounds great, and it is accurate, but it misses a very important part of the picture, and urges the client to take out a loan that is actually inferior by $2000.



And we're just talking about a meager $5000 loan here. Imagine the difference if these loans were for 200K. Loan A will require 400K of payments over ten years and, again, it will even out. Loan B will require 800K of payments over thirty yeears, but the proceeds will earn 3.2 million, for a net return of 2.4 million (again, these are estimates based on a 7% rate of return). When this 2.4 million is discounted to present value, it is worth about 150K. Loan A results in no net increase in wealth, loan B results in a presently discounted increase of 150K (the actual figure would be higher than this because the 150K is discounted from 30 years from now, whereas a truly accurate calculation would require a year by year addition and discounting that I am not prepared to undertake).



The total cost analysis (as opposed to APR) is flawed in another respect as well. To paint it quite simply, consider the following two options (ignore the time value analysis and assume a zero rate of return). Option A: pay $10,000 in 1950. Option B: pay $20,000 today. Which is the better option? Option B. Why? Inflation. The value (buying power) of $10,000 in 1950 was far more than the value of $20,000 today.



So, when comparing two loans with comparable APRs, the general rule is that the one that is paid off over a longer period of time is the better option, even though its total cost may be far more.
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#15 Consumer Suggestion

Dennis's top complaint here is right on the money. He understands exactly what these frauds are doing to America.

AUTHOR: Paul - (U.S.A.)

Few people really understand exactly how primerica is ripping off America. Even fewer can come here and explain it to others. But, Dennis manages to do both.



Primerica uses a tiered structure to distribute the measly commissions from the sale of their products. In other words, maybe half a dozen people each get a part of the payment. It starts with the original agent. Then, the person who recruited him. Then, the guy above him. And, finally some regional vice-president.



All of them get a piece of every sale. What do you call that? Multi-level? Pyramid? Trapezoid? Rectangle?



Whatever name you want to use, that's how the commissions are distributed. That's why the big effort to recruit. You want to get a piece of 100 sales from other agents.



The biggest rip-off is when primerica does their financial analysis. Immediately, they will push you to refinance your home. The problem is that you will take all your unsecured credit card debt and roll it into the mortgage.



Now, you'll pay that debt over the next 30 years. They pull all the equity out of your home during the refinancing. You get to start right at the beginning again.



In addition, they replace your mortgage with one that ends up being far more expensive. Don't let that bi-weekly nonsense confuse you. There are 52 weeks in a year. You will pay 26 bi-weekly payments. That's the same as 13 normal monthly payments.



In other words, you make the equivalent of 13 monthly payments, instead of the normal 12. That's why the mortgage ends sooner. You pay faster. It ends faster. Primerica isn't giving you any kind of a deal.



In fact, you're getting royally screwed. You see, they put a huge penalty for early pay-off into every mortgage. So, once you come to your senses and see how badly you were cheated, it's too late.



You either ride out the mortgage, or take a huge early-payment loss. Either way, primerica got theirs. They're laughing all the way to the bank. Oh wait, they ARE the bank.



You want to know the biggest part of the whole scam?



They push their way into your home by claiming to offer you a way to get out of debt and retire as a millionaire. The idiots they hire actually believe what they are telling you.



And, why not? Their salesman has been selling insurance for a whole 3 weeks. Of course, the only thing they know is what primerica has told them.



Make no mistake here. Primerica is a scam. The way they recruit unsuspecting people and use them to work over their families and friends makes primerica one of the most vile frauds listed on these pages. Using a friend or family member to snake you out of your money!



It's easy to see how citi has risen to the top. Scams. Schemes. Rip-off products sold at inflated prices. Absolutely no concern for the consumer or the community they do business in.



Citi is no different than a swarm of locusts. They fly in and devour everything in their path. Leaving behind whole communities fraught with high-interest debt.



Ethics? Moral standards? No room for any of that at the top! Those values are all crowded out by the desire for more money.
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#16 UPDATE EX-employee responds

Hear's the real truth about your APR vs. Note rate.

AUTHOR: Jesse - (U.S.A.)

By law both the APR and note rate have to be disclosed, so your whole, we quote the APR, and the others don't doesn't stand. Besides, you guys charge 1.5 points out of the gate. Hmmm, that's not fishy at all. I worked for them, trust me, they lie.
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#17 UPDATE EX-employee responds

Comparison by pfs is not apples to apples ..use their pay off strategy but do it with a less expensive mortgage and save even more.

AUTHOR: Cullen - (U.S.A.)

The way PFS does a debt comparison is not a pure mortgage to mortgae comparison. Here goes.



PFS will look a your current situation, loans credit cars and mortgages. They will then tell you that if you keep paying your debt down the way you are now, it will take you X years and you will pay Y in interest.



Then they put a refinance proposal together that rolls as much of the consumer debt as possible into a new 30 yr mortgage. They then take the average monthly debt payment and apply it to the new mortgage and what ever debt was left. So if I was paying 2000/month for all my debt and it will take 50 years to pay off all my debt because I am making minimum payments on credit cards. PFS say I can refinance most of my high interest credit card debt into a 30 yr mortgage and my monthly payments will be 1500/ month. They then will use the 500 extra a month in their pay off calculation and tell me that if you pay 1000 bi weekly on my debt I will be done in less that 30 years and save a bucnh of money in interest.



This is how they make a high interest mortgage sound good. It is not an apples to apples comparison and in that sense it is deceptive.



If you got a better rate on a mortgage and used the debt pay off strategy (which is not a bad strategy by the way) that PFS uses in its examples you would save substantially more money than you would with a PFS mortgage.



If you put PFS mortgage alone ( without the other things factored in) against any other mortgage, 99% of the time PFS would lose.



So use their pay off strategy but do it with a less expensive mortgage and save even more.
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#18 Consumer Suggestion

To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

AUTHOR: Lynn - (U.S.A.)

John,



You stated in your rebuttal that you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp



Specifically, my mortage is with a well known bank (not mortage company as often occurs, but a traditional bank.) I don't feel comfortable specifiying the name thanks to identify theft (since I now have to be idenfited through the RipOffReport), but the bank is nationally situtated and you could easily find the program to which I am referring by doing some comparison shopping). My APR is 4.75. I pay nothing "up front" or "additional" to make as many payments I want per month, when I want and applied directly to my principal (last month I made 3 payments). I enjoy complete control over my payments, including the date on which they are posted (there is no delay between the date I specify and the date payment is credited). I have no PMI...so, please explain to me why is would be in my best interests to re-fi with Primerica? I have been approached three times by your reps, but each time, it was never fully disclosed why it would be in my best interests....just a mad push to get me to sign on the dotted line.
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#19 Consumer Suggestion

To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

AUTHOR: Lynn - (U.S.A.)

John,



You stated in your rebuttal that you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp



Specifically, my mortage is with a well known bank (not mortage company as often occurs, but a traditional bank.) I don't feel comfortable specifiying the name thanks to identify theft (since I now have to be idenfited through the RipOffReport), but the bank is nationally situtated and you could easily find the program to which I am referring by doing some comparison shopping). My APR is 4.75. I pay nothing "up front" or "additional" to make as many payments I want per month, when I want and applied directly to my principal (last month I made 3 payments). I enjoy complete control over my payments, including the date on which they are posted (there is no delay between the date I specify and the date payment is credited). I have no PMI...so, please explain to me why is would be in my best interests to re-fi with Primerica? I have been approached three times by your reps, but each time, it was never fully disclosed why it would be in my best interests....just a mad push to get me to sign on the dotted line.
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#20 Consumer Suggestion

To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

AUTHOR: Lynn - (U.S.A.)

John,



You stated in your rebuttal that you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp



Specifically, my mortage is with a well known bank (not mortage company as often occurs, but a traditional bank.) I don't feel comfortable specifiying the name thanks to identify theft (since I now have to be idenfited through the RipOffReport), but the bank is nationally situtated and you could easily find the program to which I am referring by doing some comparison shopping). My APR is 4.75. I pay nothing "up front" or "additional" to make as many payments I want per month, when I want and applied directly to my principal (last month I made 3 payments). I enjoy complete control over my payments, including the date on which they are posted (there is no delay between the date I specify and the date payment is credited). I have no PMI...so, please explain to me why is would be in my best interests to re-fi with Primerica? I have been approached three times by your reps, but each time, it was never fully disclosed why it would be in my best interests....just a mad push to get me to sign on the dotted line.
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#21 Consumer Suggestion

To John, Here Are Some Specifics, you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp

AUTHOR: Lynn - (U.S.A.)

John,



You stated in your rebuttal that you wanted specifics on any bank/mortage company that could match the rates your offer through Primerica/Citicorp



Specifically, my mortage is with a well known bank (not mortage company as often occurs, but a traditional bank.) I don't feel comfortable specifiying the name thanks to identify theft (since I now have to be idenfited through the RipOffReport), but the bank is nationally situtated and you could easily find the program to which I am referring by doing some comparison shopping). My APR is 4.75. I pay nothing "up front" or "additional" to make as many payments I want per month, when I want and applied directly to my principal (last month I made 3 payments). I enjoy complete control over my payments, including the date on which they are posted (there is no delay between the date I specify and the date payment is credited). I have no PMI...so, please explain to me why is would be in my best interests to re-fi with Primerica? I have been approached three times by your reps, but each time, it was never fully disclosed why it would be in my best interests....just a mad push to get me to sign on the dotted line.
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#22 Consumer Suggestion

Paul In Brooklyn Thanx For Being Fair

AUTHOR: Lynn - (U.S.A.)

Paul in Brooklyn,



You referenced a post I made regarding my current mortgage and a "kitchen table" presentation I had with Primerica. I am responding to that post.



First off, I have to say that my 4.75 APR mortgage that I referenced was obtained just 4 months ago through my bank. In fact it was a refi rate offered through my existing mortgage. Could you have met that rate in the time frame I mention?



In addition, my bank (yes, I actually have my mortage with a bank...not a mortage company) offers me the opportunity to pay whatever I want (as long as I meet the minimum payment), whenever I want, as many times as I want throughout the month -- at no additional charge. So, for me, a bi-weekly payment schedule means nothing. Last month, I made a total of 3 payments (one scheduled and two additional and unscheduled payments) with no additional fees. Based on the on-line analysis of my mortage, all the additional monies I paid went purely to principal. Am I really that unique? Yes, I have excellent credit, so maybe that affords me special consideration...I truly don't know...but I do know that I have the ability through my existing mortgage to "work the numbers" to my advantage. Am I truly unique? I really am curious.



Again, I ask what you meant by "hidden fees." I don't believe that avenue was fully explained, and I am truly interested, as this phrase was bandied about when I had my own "kitchen table" presentation. I went into the meeting with all my finances, including my recently refianced mortgage, definted within an Excel spreadsheet,. Yet the Primerica rep kept telling me I wasn't seeing the "true picture." Yet, she couldnt' tell me what I was missing. It was, to say the least, a very disconcerting meeting.
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#23 UPDATE Employee

A little bit of info on APR. ..To all you who make your decisions via APR only, you are ripe for the plucking, and you will be ripped-off by the mortgage industry.

AUTHOR: Paul - (U.S.A.)

A little bit of info on APR. In the 1970's, banks realized that if they advertised the simple interest rate for their loan yet did compounding of the interest, they would make more money while advertising a lower rate. That became a sandal, so the APR was instituted to give us consumers a method to compare loans. The banks quickly found other ways to hoodwink the consumer. So they started to disengage costs and reclassify different costs to beat the APR. Wikipedia states APR's failings: Despite repeated attempts by regulators to establish usable and consistent standards, APR does not represent the total cost of borrowing nor does it really create a comparable standard. I suggest that all go there and to other sources to learn how useless the APR is for loan comparexison. Yet, I am amazed by how much people rely on a bogus number to make decisions. So for all the postings here lamblasting Primerica's method, read on.



Mike posted that you should compare monthly payment. He states: Dylan, does Primerica present a side by side comparison between making the EXACT SAME (proposed higher) monthly payments on either their existing mortgage and the proposed new one? This is the critical thing to compare. Yes we do when the major factor for our client is the monthly payment. But that is NOT THE CRITICAL thing to compare all the time. Even that must be evaluated in conjunction with the TRUE COST OF THE LOAN OVER TIME.



We calculate what the client would pay minus the amount of money they received and distributed (to payoff loans or credit cards). For example, if a client pays $350,000 over 30 years at an APR of 5.5% for a $225,000 note where they received $200,000 (note amount less any embedded costs and including any payoffs) and then the true cost of that loan was $150,000. You paid out $150,000 over what you received in proceeds. You got to use $200,000 to buy your house. You paid back $350,000. Therefore, the true cost of the loan is $150,000.



With a Primerica loan, we do two very significant things. First, we automatically do payments every 2 weeks. At no extra change (some banks will charge you for this, so compare carefully). That will pay off the note several years earlier. The other thing we do is to compute the interest portion of the payment each time you pay. Banks force an amortization schedule on you. For example, if you made a $100,000 principal pre-payment, you would expect that your next payment would go more to principle and less to interest. It will not. You will pay the same amortized interest as if you never prepaid the principal, in other words, you have been overcharged. Primerica will recalculate so you pay interest base on the then current principal.



So, if we can give you a loan whose true cost is less than $150,000, then you will save the difference. Let's assume that we put together a loan whose true cost is only $120,000! That is a savings of $30,000!!! That is, over time, $30,000 in your pocket!!! So no matter what the closing costs were; no matter what the interest rate is; this hypothetical loan is actually cheaper!



The Primerica loan is very often less expensive then loans from a bank with a lower APR. DON'T BE RIPPED-OFF BY THE BANKING INDUSTRY!

Mike, your title is Make a proper comparison. As I have shown, you did not compare properly.



Also Mike, you quipped about term and cash value insurance. It is not a red herring. If you own cash value (Whole Life, Variable Life, Universal Life, Return of Premium, etc), it is you who is being ripped-off by that company. Why are you not posting against them? Perhaps you don't understand how you are being ripped-off? It amazes me how easily people can be ripped-off by the reputable companies and then they attack us who are trying to help. Go figure.



Lynn. A 4.75% APR sounds good and I would suspect that with today's rates I could not beat it. But I would still provide you with the numbers so that you can decide. Did the representative compare true cost of your note to the true cost of the Primerica note? We can't beat everything but the comparison should have been done. I have told clients to keep their current notes because they had a great situation. But I have saved other clients a lot of money. Everyone should do some research. The APR is not a good comparator. Look at what Wikipedia and other references state. Live and learn.



Wikipedia:

APR cannot result in a comparable standard. Regulators have been unable to completely define which one-time fees must be included and which excluded. This leaves the lender with some discretion to determine which fees will be included (or not) in the calculation.

In the example of a home mortgage loan, the following kinds of fees are:



Generally included: Points, Pre-paid interest, Origination fees including loan processing, underwriting and document preparation, PMI (private mortgage insurance)



Sometimes included: Application fees, Life insurance



Generally not included: Appraisal, Home-inspection, Credit report costs, Title fee, Attorney and Notary fees, Closing Agent's document preparation fees



To all you who make your decisions via APR only, you are ripe for the plucking, and you will be ripped-off by the mortgage industry. But again, why don't you realize that and post against them instead of us who are trying to help. Why don't you post about the government and how bad the APR is instead of belittling how we compare loans? I just don't understand why there is so much negativity on this site.
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#24 UPDATE Employee

Primerica Makes the Right Comparison 100% of the Time!!

AUTHOR: John - (U.S.A.)

Primerica gives an in depth comparison of what their current mortgage will end up costing compared to one with Citicorp Trust Bank.



I have yet to find a mortgage company that will offer their clients the services Citicorp offers theirs. Citicorps loans: have very low closing costs, are able to enroll in bi-weekly payments with no upfront cost or monthly cost, apply the payments to their account the day they hit (not the 1st of the month), allow for the client to change the monthly payment if they would like to get out of debt faster, go up to 100% loan to value with NO PMI, go up to 60% debt to income ratio, does appraisal and title work with NO up front cost!!!!



IF SOMEONE CAN SHOW ME ANOTHER COMPANY THAT DOES THIS PLEASE LET ME KNOW!



I have recently sat down with a family that has had their current mortage for 4 years with different company than Citicorp. This was a $86,000 loan and after 4 years they have only decreased their principal $1000!!! I showed them a way to pay off their loan 10 years faster by using the same amount of money they are currently spending towards their debt! They will have over $4,000 payed off of their principal in the first year alone!!! And guess what... their APR is higher with Citicorp loan. The reason they pay off faster is because we offer bi-weekly at no cost, we charge no PMI, we apply the payments when they are made, and we encourage our clients to accelerate their payments if they have the means to do so!!



AGAIN, SHOW ME A BANK THAT WILL DO THIS FOR A CLIENT!



All I can say is who cares about interest rate? All that really matters is the actual dollars leaving your pocket, right? Even if I showed you that your loan was 99% APR, but our bank will cost you less in total money out of your pocket, what does it matter what the rate is? Do you make your payment in interest rate or actual dollars?
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#25 Consumer Comment

Make a proper comparison.

AUTHOR: Mike - (U.S.A.)

Primerica agents sure like to use a lot of words. It does take a lot of dancing around to fool someone into thinking that refinancing their mortgage to a higher APR is a good deal.



Dylan, does Primerica present a side by side comparison between making the EXACT SAME (proposed higher) monthly payments on either their existing mortgage and the proposed new one? This is the critical thing to compare. They have a certain amount of money per month, who should they pay it to? Any other method of comparison is deceptive. He needs the answer to "I can pay X per month, will I pay off the house faster with Primerica?"



Unless the Primerica mortgage has a lower APR than the existing one, the consumer's best choice will always be to not refinance. Pay the extra money they would have given to Primerica to their bank instead. I agree that banks don't want to encourage people to pay off their loans early, but in almost all cases the consumer has that right.



The potential Primerica consumer already has a mortgage. It is immaterial what the closing costs of that loan were. They must be repaid regardless, either over time with interest, or rolled into a new loan and repaid over time with interest at a higher rate. Again, the Primerica option loses.



The industry standard is to call the "note rate" the APR. It is useful to combine closing costs, etc. into an "effective APR" in order to compare loans. But the result also depends on another factor: the time to repay. If the loan is paid off early, the full closing costs still had to be paid in any case(*). This makes the "effective APR" higher and higher the shorter the repayment time is. It becomes harder and harder to justify paying closing costs on a refinance if you intend to pay early, even though the APR of the new loan will be lower.



If the proposed new loan has a higher APR, it'd better have NEGATIVE closing costs in order to be worthwhile.



(*) There is no savings in principal by quitting an existing mortgage through a refinance, even if it had very high closing costs. Or put another way, the closing costs of the existing mortgage are not a factor in deciding whether to refinance or not.



Other people here know way more about insurance than I do, but I find it quaint that Primerica immediately throws out the red herring about cash value life insurance whenever their term insurance is questioned. The two have nothing to do with each other. Stop beating that dead horse.
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#26 Consumer Suggestion

To Dylan Just What Is Your Definition of APR?

AUTHOR: Lynn - (U.S.A.)

Dylan,



I find your rebuttal defending Primerica products interesting. First you mention "You refer to the APR rather than the note rate, which is good," then you go on to speak of hidden fees only divulged in a Truth in Lending Disclosure...I believe you are referring to a HUD-1, please correct me if I am mistaken.



I can't say for sure know how Primerica works the numbers (I only sat through one of their dreary "kitchen table chats" before showing them the door as they couldn't touch my 4.75 APR mortgage with fully disclosed $900 in closing costs), but APR is supposed to recalculate interest based on all those "hidden fees." So what's the difference between an APR and the true cost of doing mortgage business -- those "hidden fees" you mention? Please elaborate, with details of course, how a consumer

can watch for such tactics. I'm not talking about unethical mortage companies that change numbers on the sly or those that don't provide a HUD-1 as reguired by law -- I'm talking about any fees that wouldn't be included in the HUD-1 or in the APR. Just what are those fees and what companies engage in such tactics? Name names, please, so as the consumer watchdog that you are, you can fully inform the public.



Looking forward to your reponse,



*L*
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#27 UPDATE Employee

Primerica Bad Products? The Real Truth!

AUTHOR: Dylan - (U.S.A.)

Well, Mike. I would have to diagree with you as well. You have apparently been taught, as have most other people, that the most important question to ask about a loan is "What's the interest rate?". You refer to the APR rather than the note rate, which is good. For those who don't know the differance, the Annual Percentage Rate (APR) is a figure of the total of all fee's associated with the mortgage including interest, closing costs, etc. represented in a percentage rate. The Note Rate is simply the amount of interest charged on the balance of the mortgage.



The question you should really ask though, is "What's the TOTAL COST of this mortgage?", wether you get it form Primerica, or your local bank. Some mortgages may advertise low rates but make the difference in hidden fee's. If you want to find out what the Total Cost on your mortgage is, find the Truth In Lending Disclosure page in your mortgage documents. It will tell you the Note Rate, the APR, the Total Cost of Financing, and everything else you really need to know to find out how much your mortgage really cost.



Primerica clients are shown how any proposed motgage compares to their current loan, with a side by side analasys of both. This shows the total amount of interest they will pay on either mortgage, the total amount of time they will be in debt, with either program they use, and how much they will pay TOTAL, both monthly & long-term, with either mortgage. They have the fact's in front of them. They are able to make a very well informed decision. Do you really think that if our mortgage would be worse off for them they would take it? Even if it was, which would be a very rare thing, we would tell them that, and let them know they would be better off keeping their current loan program.



You see Mike, our goal is not to sell them a mortgage, it is to help them to become Totally Debt Free. I wouldn't expect any mortgage broker, or their company, to understand this concept, since they make their money keeping people in debt, and refinancing their loans as often as possible. You see, at Primerica, we have our client's best interest at heart, and we Do What's Right For Our Clients All The Time. Not what's going to be the right commision for the representative.



At Primerica we value Life-Time client relationships, and we would not be able to maintain those if we were in the business of ripping people off.



As for insurance, yes, most, if not all, companies market term insurance. Aggresivly, well I don't see any commercials on evening television program advertising Term, Cash Value yes, term no. Every Term policy I have ever picked up and read from another company had a Conversion Clause in it. Meaning that, when the initial term expires the policy must either be forfieted, or converted to some type of Cash Value, usually Whole Life, which is one of the WORST offenders on the market today. Most only run 5 or 10 year terms, not nearly long enough to properly protect a young family.



The VAST majority of the policies our company issues are 25 year to 30 year terms. That gives the family protection when they need it most. When do you most need Life Insurance? Well, first let's look at why you need Life Insurance in the first place.



We teach that the primary purpose of Life Insurance is Income Protection, or Replacement of a breadwinners income, in the event of their early death. You need Income Replacement, or Life Insurance, when you are young. You have a mortgage, consumer debt, children still at home, college to pay for, etc. and the loss of your income would be devastating to your family, financially speaking. Obviously, your death will be devastating to them as well.



So when a family is young they have high financial responsiblities, while at the same time they have had very little time so save money for the future and for retirement. As time goes by their need for the Income Protection will dimenish. The kids will grow up and move out of the house, go to college, and start families of their own. They will pay off the mortgage, and eliminate their consumer debt (credit cards, cars, student loans, furniture payments, etc.). At the same time, they should be putting money away for retirement.



Now, when you have eliminated those financial responsibilities, and have saved enough money to live on for the duration of your life, during retirement, what need do you really have for Life Insurance? Of Any Kind?! This is what is called the Theory of Decreasing Responsibility.

But, do you really think it is going to be in your insurance agents best interest to show you how to get out of the need for life insurance? Especially since he gets paid by making sure you

have and keep that insurance policy!



As far as our rates go, I don't know why you both seem to think that they are so expensive, but, we are actually VERY COMPETETIVE. The other thing to consider is that our policies are typically 25 to 30 year terms, as opposed to 5 to 10 year terms, obviously a longer term will cost more overall, though it may be the same dollar rate per unit of coverage.

(Our unit = $1000 of coverage) The thing to remember is that ALL Life Insurance rates are based off of the risk of the Insured dying during the period covered by the policy, also known within the industry as the Mortality Table.



The older a person is the higher the risk. So, rates go up according to your age. Thus, it is actually more affordable to carry a 30 year Term policy, than say, three seperate ten year policies, taking each as the previous expires. Why? Because the rates for the policy are determined by the attained age and health of the insured at the time of application. So, a 30 year term is based off of a younger age for the life of the policy, where as you would otherwise have to suffer an increase in premiums every ten years, which will cost much more long term.



The other major differance between policies issued by Primerica, and policies from other insurance companies, is that we issue only one policy per family, listing, let's say, the Father as Primary, the Mother as a Spouse Rider, and the kids as a Child Rider. By the way, all the children, are listed, and charged, as a single rider. This saves the family money, as opposed to issueing seperate policies on each family member. EVERY Life Insurance policy issued, regardless of what company, carries annual policy fee's.



By issuing only one policy, and insuring the family through riders, we eliminate the cost of them paying policy fee's multiple times. That is very beneficial for them, and the use of riders in absolutly no way affects the effectiveness of their being insured. (i.e. reduction of death benefits or other features of the policy.



Like I said Mike, We Do What's Right All The Time. That is what seperates us from other insurance and mortgage companies in America today. Contrary to what you, Dennis, and many other people from within the Insurance and Mortgage industries would like to have people believe, Primerica Financial Services is a company built on a solid foundation of helping families to become debt free and financially independent, by doing what's right for the family EVERY TIME.



Primerica is a company built on a strong principle & foundation of ethical standards that far exeed those expected of most campanies, and individuals, in the world today.



Our agents and management are held to a very high standard of exellence, that you will be hard pressed to find elswhere, in this industry, or another.



I am very PROUD to call myself a Primerica Representative. That is a title that cannot be carried lightly, especially in an industry that is otherwise so riddled with deception and dishonesty.
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#28 Consumer Suggestion

Primerica products are simply a bad deal.

AUTHOR: Mike - (U.S.A.)

There is little practical difference between paying extra on a Primerica mortage and a conventional one. The difference in the way payments are credited ends up being equivalent to less than 1/10 of an APR point. It is not worth taking a higher APR in order to have this feature. For any given schedule of payments, the person who pays the least interest will be the one with the lower APR.



Primerica "financial advisors" should tell customers to pay extra on their existing mortgages if Primerica can't beat their APR and make refinancing truly worthwhile. They will pay off the house sooner and for less total money than if they refinanced to a higher APR Primerica loan.



There's no need to argue whether cash value or term life insurance is better. Simply comparing among TERM policies, the Primerica offering is a rip-off. An insurance agent reported here a while ago that the Primerica policies cost more in premiums than nearly all other equivalent term life insurance, and also pay the agent less comission. If that's still true, there is no reason for anyone to buy Primerica term insurance, or to sell it.



It is strange of Primerica trying to paint themselves as rebels in the insurance world. All major companies offer term life insurance, and market it aggressively.
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#29 UPDATE Employee

The Truth About Primerica re: lernding, insurance, etc!!!

AUTHOR: Dylan - (U.S.A.)

I don't know exactly what your motivation in writing this FALSE report is, but can only guess by your comments regarding insurance that you are probably an agent with another company. So let me clarify the misrepresentations you have made about Primerica, and tell everyone why they are incorrect!



First of all, the reference to a pyramid scheme.

SO incorrect, for one thing, pyramids are highly illegal. I am sure you meant to say MLM, though this to would be incorrect. Primerica is a company built on the brokerage system, just like your wifes real estate office, and just like every other financial firm in the market. If you had any real information on the company you would know this. Or are real estate companies "Pyramids" as well?



Second of all, the remarks regarding Life Insurance. I will assume that when you say Permanent Insurance, you are reffering to Whole Life, Universal Life, Variable Life, or some other form of Cash Value insurance. One only has to look to articles written in Consumer Reports, Money magazine, etc. to find that experts WHO DON'T have a vested interest in selling Cash Value Insurance, will tell you NOT TO. They recommend buying Term Insurance ONLY!!!

As far as pricing goes, Term Insurance is actually 5-7 times LESS Expensive than any type of Cash Value Insurance.



Lets look at why Cash Value is not a good thing!

Because you may be saying, "But Dylan, my insurance has this great savings plan attached to it." Well, if your going to treat your insurance like a bank, for saving money into an account, lets look at how that Insurance Bank works. There are four rules that apply to every Cash Value Life Insurance Policy on the market. They are:

1.) They keep all deposits for the first 2-4 years of the policy. This means, lets say you start sending $100 a month in to the savings portion of your policy. You go in two years later and ask for $200 to put new tires on your car. You agent will inform you that you've got zero dollars in that account. You want to continue sending your money there?



2.) The net effective yield on these accounts is 1-2 percent. Don't take my word for it, this came from the Federal Trade Commision, who spent millions of dollars and several years doing a study on what the return on these Cash Value Policies really was.



3.) They will charge you 6-8 percent to "borrow" your own money out of this "savings" account. If you have to pay interest on it, is it really your money. Lets give them the benefit of the doubt, and say you earn 2% and borrow at 6%. Well if that's the case, aren't you really getting a negative four percent rate of return on you money? Hmmm?

4.) They keep the return if you die. Don't understand this one? Well basically that means if you have $25,000 in the savings and $50,000 of insurance, youd expect your beneficiaries to receive $75,000. Right? WRONG! The $25,000 in the savings account reverts back to the insurance company to help pay off your Death Benefit! Kind of like a buy 2 get 1 sale. That's exciting, isn't it. Don't believe me, that's fine. Go pick up a couple of books, The ABC's of Making Money & Personal Finance For Dummies, and see what they have to say about Cash Value vs. Term. Your agent sold you Cash Value because he was paid a WHOLE LOT more for that, than he would have for selling a LOW COST TERM policy!!! Cash Value Insurance is what Should be listed on Rip-Off Report. Guess it is now, huh.



Third, let me address your UNSUBSTANTIATED claimes about our rate of Forclosure, and the other claims you make about our mortgages. Primerica has actually got one of the lowest foreclosure rates in the industry, that's because we take time to educate our clients about how their mortgage works. We also put together a comprehensive plan that shows them how the mortgage payment fits into their budget, how it affects their total time in debt, andhow it affects the total amount of interist they pay on their debt. Now, do you really hink we can show them all of these things and still rip them off. If our foreclosure rate was high, then do you really think that CitiCorp Trust Bank; FSB, or Citi Mortgage would want to do business with us. Contrary to what you may beleive, it is not in the banks best interist to forclose on your home. These lenders both hold our company, and our clients, in high enough regard that they have specific departments devoted only to working with our representatives and their clients. We also show our clients how to become debt free, so they never need to borrow money from a bank again. Think your banker will do that for you. We teach them that they don't have to pay for Private Mortgage Insurance (PMI) once their loan is below 80% LTV. (Loan To Value Ratio) We show them that by making their mortgage payment bi-weekly, paying half every two weeks, that they can actually eliminate 8 to 10 years of their mortgage payments. Our loans actually post the payment when it is made, unlike most banks, who will allow you to make bi-weekly payments, but only post them once a month. Even if our loan was a couple of points higher than the banks, who paid less interist? They guy who made payments to his bank for 30 years, or the guy who made payments for 22 years? Same loan amount, same initial term (30 Years)?



Fourth, your remark conserning our investment products. We teach people that the best to invest their money is through mutual funds. If you look at the market, hitorically, mutual funds have averaged 12%. Not 1-2%, like cash value insurance policies. We offer mutual funds from Smith Barney, wich I am sure you can't argue, is a very respected investment firm. Their fund managers average a much higher time period managing their respective funds than the industry average. That can only be a good thing!



I think that the next time you are going to try to attack a company you should get the facts straight before you open your mouth, and make false claims and statements to try to damage that companies reputation. Our clients are very happy with the service we provide them, and are better educated than most other people. If you would take the time to research our company from CREDIBLE sources, then you would know that what I have said is correct. Just one more thing, try typing God, or Jesus, into the search engine on your computer, see what kind of information you find, and then decide if everything you find and read on the internet is true!!!
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