Primerica: How does the company make money?

I was told by a friend that Primerica (in Canada) does not make much money off its term insurances; instead it makes money off the mutual fund investment portion. So say a customer invests $200 dollars into Primerica, which goes to AGF (an investment company)'s mutual fund. Then AGF would pay 2% of $200 ($4) to Primerica for refering a customer, and the 2% cost is NOT being loaded onto the customer.

So basically, the 2% can be considered as either a "referral fee" or AGF's "appreciation money" that will not affect the initial customer's return (his $200 is fully invested and still grows at "x% - AGF's management fee"). In the end, the customer's profit stays unchanged, but AGF spits out a portion of its profits to Primerica.

Does this make sense? Is this the way Primerica really operates or there are more tricks inside?

Please help I am very interested (in the mechanism).

Andrew

PLease excuse the Primerica basher, he knows not what he does.!

You mentioned they don't make much off the sale of Term Insurance, i'm not saying your friend is telling a fib, but we actually make more than other agents when it comes to selling Term. Most companies pay thier reps about 10 to 30% commision on the sale of Term insurance, we make from 25 to 95%.

The Company makes good money on our Term products (we own our own insurance company)

You mentioned tricks as well.No tricks there can't be any tricks, especially in the securities.I can't comment on the securitites portion.But i can say that i have prior knowledge of the system and can testify that the NASD is no joke and they are all about protecting the consumer and the integrity of products offered by licensed individuals and companies.

Gross Dealer Concession or GDC is the revenue to a brokerage firm when commissioned securities and insurance salespeople sell a product, whether it is an investment like stocks, bonds, or mutual funds, or insurance like life insurance or long term care insurance. The commission that the agent receives is usually a percentage of this figure.

For example, a mutual fund with a 5.75% sales charge is sold to someone who invests $10,000. $575 GDC is created by the sale, and the investor has an initial account balance of $9425. If the sales agent receives 32% of the GDC, he makes $184. If the payout is based on Production Credits or PCs, it would perhaps be about 5.5% of the total sale, or 32% of 550: $176.

If there is no apparent load (or initial commission), the investment firm is still allowed to charge a fund management fee--such as a 12b-1 fee. A portion of this might be allocated to the brokerage.

The securities industry is regulated. All brokerages make thier money in the same way. There are no "tricks" in how they make thier money. (Although those who have a beef with the securities industry will disagree.)

Primerica is a pyramid scheme that's been a while for a long time. Your main goal is to recruit as many people as humanly possible and get them to invest money into it. You will never see any money unless you in for a long time. I've been to one of those seminars with a friend and those people are like zombies. They don't explain anything they really do until you start forking out money to invest. Your best bet is to invest your own money into something else not them.

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