Is Network Marketing/Multi-Level Marketing a Pyramid Scheme? Let’s Compare MLM vs. Regular Commission-Based Businesses and Self Employment – September 7, 2023,

A reminder that LEGAL/Registered multi-level marketing(MLM) in modern practice is nothing more than commission income splitting. Network Marketing(MLM) is in many ways getting sales and commissions from your NETWORK. One of the reasons modern MLMs still use the pyramid model to sell their system is that visually it’s more appealing to the prospect.

If I say to you, hey join my commission based business and if you do a lot of sales I’ll promote you and you’ll get paid additional commissions for every person you train to do what you did, you’d look at the opportunity differently, you might even see the commissioned job for what it is? Which is HARD WORK.

However if I present my commission job by saying you can make a residual income off of everyone you bring to my Network marketing company, then you might be more motivated.

A lot of people like to point to stats of how most people in a MLM don’t make any money, this is true but that’s because those statisticians are being disingenuous. The truth is most commissioned employees FAIL, most businesses FAIL and regardless of how long it takes, the numbers re what they are.

You have to be self-motivated in order to be successful. Now, my personal issue with MLM are their products, because working in a MLM often turns you into what they call in the insurance business a “captive agent” and for me, that’s what really sucks.

For an example we can talk about a well known Multi Level Marketing Insurance company Primerica, which focuses on TERM insurance. Now, if you work for Primerica, you’re basically selling Term Insurance, I don’t even know if Primerica sells any Permanent Insurance and the reason Primerica wouldn’t sell Permanent Insurance is because the commissions would be smaller and therefore harder to SPLIT.

You have to remember the with Whole Life and Universal Life Insurance, unless you break the law the insurance is going to send you money, furthermore with whole life and universal life insurance, you can borrow money from your policies, whereas with TERM insurance, they’re insuring your for a TERM, and if you live passed that term, the Insurance company never has to pay you a dime.

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Also with Term insurance after you reach a certain age I think 71, you’re uninsurable. There is term to 100, but most people don’t take that option because of the more expensive premiums and quite frankly I’m not even sure if Primerica offers permanent term insurance, so if you look at the Primerica MLM in many ways, their customers and their agents are doing a lot of the heavy lifting.

But from a business perspective, you can see how and why Primerica benefits by operating their business the way they do and also how a hard working insurance agent could benefit from the Primerica MLM.

But on the flipside, if you’re not hardworking, Primerica will be a negative to your cashflow. Now if you’re working as a regulars insurance agent, who can sell multiple different insurance companies, you’re not limiting yourself to term insurance and in the grand scheme of things, this can work to your advantage, but you’re still going to have to work just as hard as you would work at Primerica and there is a reality that you might get LESS support than you would get at Primerica.

Furthermore if you’re not a captive insurance agent, your commissions could be less if you don’t sell term insurance. The best insurance policies typically pay the lowest commissions. One of the reasons you don’t hear much push back from insurance agents when some insurance agents bash whole life and universal life insurance is because the commissions are usually less.

Again I have to remind the reader that whole life and universal life insurance almost guarantee you a payout as long as your premium payments are covered, whereas term insurance in most instances NEVER have to payout anything.

Now, only if you met a knowledgeable insurance agent would you even know that, but because term insurances pay much higher commissions, this equates to the peddlers of term insurance, often appearing like the superior option, and this is one of the reasons why Primerica is often one of the most profitable insurance companies in America, and why they still attract top talent to their MLM.

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Now, of course more people fail than succeed, but that’s the insurance industry in general. Now, if you’re wondering whose side I’m on? The truth is I’m not choosing sides, I’m merely trying to show people that there’s not one way to approach this Network Marketing debate.

I personally don’t want anything to do with income splitting my commissions, give me my full commissions. I hope this helps