logoPrimerica, a life insurance company that caters to middle- and lower-income clients, finds itself in a predicament similar to Wal-Mart, whose CEO is worried that the chain's customers are running out of money earlier and earlier each month, as they struggle to get from one paycheck to the next.

As anyone who dozed through Marketing 101 will tell you, selling to lower-income consumers has one big advantage: there are lots of them. On the other hand, when times are tough they don't have as much money to spend on non-essentials.

Since its founding in 1977, Primerica has specialized in term life insurance, a much more affordable, though more limited, form of protection than whole life or universal life.

To keep its fixed costs down, Primerica uses a multi-level sales network, much like companies that sell soap products, expensive pots and pans and plastic bowls. Thus, agents get paid commissions not only on what they sell, but also on sales made by the agents they recruit

This has worked out pretty well for Primerica, which has never had trouble recruiting agents. It signed up about 230,000 in the last year, but nearly that many dropped out so keeping a stable army of agents isn't as simple as it sounds.

Can't pass the test

Part of Primerica's problem is that it tends to recruit agents who know their territory – minority group members, blue-collar adults without a lot of formal education and parents looking for a second job to make ends meet.

While some of these people might turn into good agents who sell a lot of insurance, they tend to have a hard time passing state licensing exams. In fact, about 80% of Primerica recruits don't become agents and in many cases it's because they can't pass the state tests.

So, what's an insurer to do?

Primerica isn't likely to have much luck recruiting eager young college graduates to go sell life insurance in blue-collar neighborhoods, so it's trying to jawbone the states into revising their licensing tests.

This is not well-received in some quarters but several states have agreed to start collecting demographic data to ensure that its tests are free of cultural bias and that they aren't, as some critics contend, simply testing would-be agents' test-taking abilities.

Dangerously underinsured

chartPrimerica argues that without some kind of action, lower-income families will be less likely to have the insurance they need. And in fact, that seems to be the case. The number of middle-class families buying term insurance dropped 45% over the past 25 years.

"Millions of middle-income households in this country are dangerously underinsured or have no life insurance," Primerica CEO Peter Schneider said in a recentWall Street Journalarticle chronicling the insurer's problems.

Interestingly, despite the bad press Primerica has experienced recently, ConsumerAffairs.com has received a relatively small number ofcomplaints about Primericaand only 15% of those complaints dealt with its insurance products. By far the largest percentage (30%) dealt with its recruiting tactics and another 25% with the trials, tribulations, disappointments and victories of self-employed salespeople.

Does any of this matter to a consumer looking for the right kind of life insurance? Certainly having a competent and knowledgeable agent can be helpful but many insurance companies, likeGEICO, have millions of presumably satisfied customers even though they have no agents.

Most important is to be sure you'rebuying the right kind of policy, one that provides enough protection at a price you can afford.

Enough but no more

The attraction of term life insurance, the kind Primerica pioneered, is that it covers – as the name implies – a certain term.

For example, if you have children who are 10 and 12 years old, you might want a 10-year term policy. That way, if you die – remember, that's what life insurance is all about – within that time, you family will get $50,000 or $100,000 or whatever amount you have chosen to defray your burial costs and help the children get through school.

Term-life is cheaper because it covers you when you are, presumably, younger and less likely to die.

Whole and universal life insurance plans, on the other hand, are more expensive because they are really savings plans that happen to include a death benefit.

It can be a complicated decision but it's not so complicated that anyone with dependents should put it off. A good place to start is to check with your state Insurance Commission, also called the Department of Insurance in some states. There you can find information about which companies are licensed in your state and see their financial ratings.