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The Financial Services Company for the 21st Century Who We Are With more than 100,000 full and part-time representatives, Primerica is the largest financial services marketing organization in North America. Primerica offers consumers an array of financial service and products, including term life insurance, mutual funds, debt consolidation loans, home mortgages, long term care insurance and pre-paid legal services.
What We Do We market financial services products to the middle and upper-middle income marketplace.
As consumers, we have been conditioned to ask the wrong two questions when we borrow money:
Debt Elimination What’s my interest rate? When we should be asking: What is my total cost? When will I be out of debt? What’s my payment?
Rule of 50/25 ON AN AVERAGE LOAN OF $100,000 AFTER 15 YEARS (50% OF THE LOAN TERM), YOU’VE PAID $141,607 IN MONTHLY PAYMENTS. HOWEVER, ONLY $21,287 HAS BEEN APPLIED TO PRINCIPAL. THAT MEANS YOU HAVE PAID LESS THAN 25% OF YOUR LOAN BALANCE. THE ILLUSTRATION IS BASED ON A 30-YEAR MORTGAGE WITH AN 8.75% APR AND A MONTHLY PRINCIPAL AND INTEREST PAYMENT OF $786.70 .
Power of Equity Builder ON A $.M.A.R.T. LOAN ® OF $100,000 AFTER 15 YEARS (50% OF THE LOAN TERM), IF YOU PAY $154,193 IN BIWEEKLY PAYMENTS, $45,708 HAS BEEN APPLIED TO PRINCIPAL. THAT MEANS YOU HAVE PAID OFF ALMOST 50% OF YOUR LOAN BALANCE. THE ILLUSTRATION IS BASED ON A 30-YEAR MORTGAGE WITH AN 8.75% APR AND A BIWEEKLY PRINCIPAL AND INTEREST PAYMENTS OF $393.35 . RESULTS OF ACTUAL DEBT ACCELERATION PROGRAMS DEPEND SOLELY ON YOUR COMMITMENT AND ADHERENCE TO THE PROPOSED ACCELERATED PAYMENT SCHEDULE. * BIWEEKLY PAYMENTS MEANS PRINCIPAL AND INTEREST IS PAID EVERY 14 DAYS. THE EFFECT OF PAYING BIWEEKLY IS TO MAKE ONE EXTRA MONTHLY PAYMENT PER YEAR. ** ILLUSTRATION ASSUMES BIWEEKLY PAYMENTS ARE MADE ON TIME FOR 22 YEARS SO THAT ALL PRINCIPAL HAS BEEN PAID.
Before Primerica *The Jones family is a hypothetical family of four consisting of a 35-year-old non-smoking male, his wife and their two minor children. The Jones family is used to illustrate our products and is not intended to reflect any real people or family. Total monthly payments = $2,557 Let’s Look at the Jones Family* Refinanced $210,000 for 25 years at $1,531 per month 3 At age 35 Makes available $1,026/month 4 Total monthly payments = $2,557 Take the $272,700 lump sum and invest with the$2,557 now available each month until age 67 The total, given a 10% return = $2.84 million 5 1 st Mortgage $175,000 @ $ 1,350 1 (for 25 more years) Personal Debt $32,157 @ $ 1,207 2 Original Loan ARP: 7.99% Original Term: 30 years Original Loan Amount: $184,100 Market Value of Home: $263,000 Invest $658 a month at 10% for 15 years = $272,700 5 Add $368 a month toward payment of principal $272,700 invested/house and all debt paid off in 15 years
Ask yourself this? 43% of workers plan to work after “retirement.” With NO Debt. How would you feel in Retirement?
The 3 Primary Sources of Retirement Income 1. Premier Business Magazine, Fall 2007 Issue The average retirement savings for U.S. baby boomers is less than $25,000 and 60% don’t have an IRA 1
The Power Of Compound Interest $20,000 $40,000 $20,000 $40,000 $80,000 $20,000 $40,000 $80,000 $160,000 $320,000 $640,000 The Power of Compound Interest This simple calculation gives you the approximate number of years it will take to double your investment. Based on the Rule of 72, a one-time contribution of $10,000 doubles four more times at 12% than at 4%. The table serves as a demonstration of how the Rule of 72 works and is only an approximation of accumulations. It is not intended to represent any specific investment, in which rates of return will fluctuate. How many doubling periods do you have in your life? Number of Years 4% 6% 12% 0 $10,000 $10,000 $10,000 6 12 18 24 30 36 The Rule of 72
The Power of Compound Interest $200 Monthly Savings for 35 Years (Age 30 - 65) 12% interest 4% interest 6% interest Rates of return are nominal rates, compounded monthly. Contributions are assumed to be made at the beginning of the month. The chart above is not indicative of any particular investment or savings vehicle. It does not take into consideration taxes or other applicable deductions. $182,746 $286,370 $1.3 Million
Income Protection Isn’t your biggest asset your ability to earn income? What’s your biggest asset? Your House? Your 401(k)? Averaging $40,000 per year from age 25 to age 65 you would earn: $1,600,000
The Theory of Decreasing Responsibility Today 1. Young children 2. High debt 3. House mortgage Loss of income would be devastating At Retirement 1. Grown children 2. Lower debt 3. Mortgage paid Retirement income needed How Life Works
Where Would You Rather Save Your Money? $200 Per Month Plan A Plan B
Keeps your money for the first 2 years.
Money Credited to your account immediately.
1% – 5% Return on your money.
5% or greater potential return
on your money.
3. 6% – 8% to borrow your money. 3. No fee to withdraw your money. 4. Keeps the savings if you die. 4. Family gets the money if you die.
Income Protection 1. Kiplinger’s , January 2005 2. National Underwriter , September 20, 2004 3. National Underwriter , April 25, 2005 Life insurance provides income replacement to maintain a families current standard of living. 82% of families with individual life insurance own CASH VALUE! 59% of households have no individual life insurance at all. 44% of households believe they need more life insurance. 3 59% of households have no individual life insurance at all. 2
Buy Term And Invest The Difference John $75,000 Mary $75,000 Total Protection $150,000 Monthly Premium $114 Cash Value Insurance Before Primerica Changed to Primerica’s Term Difference = $37/month! More than three times the coverage for $37 LESS per month! Invest the Difference $37 monthly savings invested at 10% for 20 years = $28,300 at age 55. If the $37 monthly investment continues for 12 more years until age 67 = $103,900 Plan A Plan B $300,000 $300,000 $600,000 $77
Most People Don’t Plan to Fail, They Fail to Plan The Problem: Traditional financial institutions sell you products. They don’t provide you with a total solution. Doesn’t a Financial Needs Analysis make sense?
The Solution: A Financial Needs Analysis
The FNA provides solutions in these areas:
Financial Position Financial Position Jack and Donna Ryan Cash Flow Your objective is to identify areas where you ca free up money to save. Monthly Income Monthly Expenses % of Total John's Employment Income $4,200 67% Other Income $100 2% Mary's Employment Income $2,000 32% Total Income $6,300 100% Monthly Expenses % of Total Debt Payments $2,325 37% Insurance Premiums $605 10% Savings $150 2% Taxes $1,380 22% Living Expenses $1,840 29% Total Expenses $6,300 100% Net Worth Your objective is to increase your net worth - the amount of money you would have if you were to sell everything you own and pay off all your debts today. Assets Liabilities Checking, Savings and Money Markets $5,000 Home Mortgage Balance $145,000 Stocks, Bonds, CDs and Mutual Funds $31,000 Other Debt Balances $32,157 Other Non-Retirement Assets $0 Total Liabilities $177,157 Current Life Insurance Cash Values $4,200 Home Market Value $225,000 Net Worth Retirement Assets $55,000 Total Assets $320,200 Total Liabilities $177,157 Total Assets $320,200 Net Worth $143,043 To make progress toward your goals, your net worth must increase over time If we can help you increase your net worth by helping you find ways to better manage your cash flow, would you be interested?
The Question is, Do we have the Products? Do we have the Market? Do we have enough offices to serve the consumer? NO Yes Yes
Opportunity If you could improve your career... Would you want to make more money? Have more control of your time? Or both? Can you achieve this with what you are currently doing?
Cash Flow Quadrant Which two ways to earn income appeal to you the most? EMPLOYEE Has a job. Income based on position, not the person. SELF EMPLOYED Owns a job. Dentist, doctor, lawyer, hair stylist, real estate agent, salesperson. BUSINESS Owns a system. Unlimited income potential via manufacturing, marketing, etc. INVESTOR Has money working for them. Enjoys complete freedom and lives the dream.
How Much Do Americans Earn? U.S Population of 300 Million 50% earn less than $30,000 70% earn less than $50,000 90% earn less than $100,000 Top Richest 5% 673,273 earn $500,000+ According to Time Magazine October 30, 2006 Sources: Bureau of Labor Statistics, U.S.Salary.com
Most Successful Ad in History Ernest Shackleton was looking for a hardy crew he could take on his quest to discover the South Pole. The next morning, over 5,000 men were waiting outside The Times’ offices. Shackleton reached the pole in 1907. The following classified ad appeared in The Times of London: The lesson is that we respond when we are challenged to greatness!