Is PHP Agency a Pyramid Scheme? Inside the Life Insurance MLM

People Helping People (PHP) Agency is a life insurance company founded by CEO and conservative pundit Patrick-Bet David. If you are an aspiring insurance agent, you have probably heard of this company, wondering if PHP Agency is a pyramid scheme.

Our team of experts at Business2Community dive into the data and take a close look at how this company operates so that you have all of the information you need to know before making a decision.

The PHP Agency Business Model

PHP was founded in 2009 by Patrick Bet-David. The company refers to itself as “a national financial services company” and specializes in selling life insurance.

PHP Agency has not been legally determined to be a pyramid scheme, nor have any lawsuits been brought against the company alleging such. However, the insurance company does operate as an MLM with an emphasis on recruitment and creating a downline rather than on product sales.

How PHP Works for Agents

Here, we’ll explore what it’s like working for PHP and discover how it fits within the MLM business model.

Recruiting new agents

If you’re an agent for PHP Agency, the experience will be much like it is working as a salesperson for other MLMs like Primerica, with heavy reliance on recruitment.

PHP agents are expected to sell life insurance products and also recruit others to join the agency. The recruits make up that agent’s downline, which is critical for increasing earnings in an MLM. That’s because, as agents bring in new recruits, they make a percentage from the commissions that their recruits make.

An agent who has a downline is expected to provide their downline with licensing resources and support and to explain all of this to their recruits.

Additionally, agents are encouraged to use the Project 100 Method, a strategy commonly used in life insurance MLMs. In this method, agents create a list of 100 people from their social networks and call all of the contacts on the list to set up an appointment with them. Agents are then expected to try to sell insurance to each of the people on their list and ask for referrals for others, as well as prospect potential recruits.

Reviewers on Reddit break down how essential it is to recruit if you want to make any money at all.

Associated Costs

According to PHP Agency, the joining fee is $199, however, it isn’t clear what further costs are required. One reviewer on Indeed says that all in all it costs about $500 to get started, including the licensing courses, tests, fingerprints, and continuing education.

They also say that you’ll be encouraged to spend money on events, as well as monthly fees.

Compensation Structure

As with most MLMs, the compensation and promotional structure for PHP agents is complicated.

• Level 1: Trainees who achieve level 1 receive 30% commission once they have completed the New Associate Agreement, and pay the New Associate Fee of $199. According to PHP Agency, the fee includes administrative processing, “certain educational materials, licensing resources, and support services”

New Associates have 3 days to request a refund if they decide to not go ahead. The request must be emailed to the upline Marketing Director as well as to the PHP admin email address.

One reviewer on Reddit talks about how they were under the impression that they would automatically be refunded the $199 once they registered, but soon found out that wasn’t the case — another example of the lack of transparency when it comes to fees for agents.

• Level 2: Associates earn 40% commission once they recruit three people and get three additional applications for more recruits. You must also have “3,000 submitted points” — there are a certain number of points generated by your direct sales.
• Level 3: Associates can earn 50%, if within 90 days they have submitted 15 applications, have 15 base recruits, and 15,000 additional submitted points.

In total, there are 11 levels agents can move through with PHP Agency, with the highest commission being up to 122%. However, to reach level 11, you need to have 12 of your recruits become direct Marketing Directors, you need to have recruited 600 licensed agents, and 600 super base recruits, made 600 super base sales, and have submitted 1,200,000 super base points.

If you want to take a deeper dive into the compensation plan for PHP Agency, the video below does a good job of breaking it down.

How PHP Works for Customers

If you’re buying insurance from PHP, chances are your experience will be fine. PHP Agency partners with legitimate providers around the country, including Mutual of Omaha and National Life Group.

You can choose from various life insurance products, as you could from any life insurance company. However, due to the MLM nature of the company, there are some things you may want to watch out for, such as high-pressure tactics. Since agents rely exclusively on commission to earn income, they may be more likely to push potential clients into purchasing.

Also, since PHP agents are encouraged to set up appointments with people in their social networks to make sales, customers may find that they feel pressured to purchase a policy just to support a friend trying to rise through the ranks of the agency.

How PHP Fits the MLM Model

PHP Agency shares several traits that are typical of MLMs:

• Recruitment focus: PHP’s compensation and promotion structure emphasizes recruiting new agents instead of focusing on selling insurance products to the public. Recruitment is essential for advancement, as well as making higher commissions. In fact, according to the PHP Compensation and Promotional Guidelines, to advance to each level in the company hierarchy, the number of recruits you need increases at a greater rate than the number of points from sales you make.
• Targeting personal networks: Agents are encouraged to sell using the Project 100 model — wherein you make a list of 100 contacts in your network with whom you can try to make appointments. This is also a common practice in MLMs and is known for straining personal relationships.
• Overpromising of income potential: MLMs are notorious for telling potential recruits that they can get rich by selling the company’s products or services when the business model of an MLM actually makes it very difficult for anyone but those at the very top of the hierarchy to make real money. Even in the video below, you can see a PHP Agency representative saying that you’re most likely to become a millionaire in the finance sector — which PHP Agency belongs to.

Is PHP Agency an MLM?

Yes, PHP Agency is an MLM according to the criteria established by the Federal Trade Commission (FTC). The business relies heavily on recruitment for earnings which is one of the main characteristics of an MLM.

To reiterate what we mentioned above, here are some of the main characteristics shared by PHP and an MLM:

• Recruitment critical for success: In PHP Agency, in order to ascend the hierarchy you must constantly bring in new recruits
• Selling to personal networks: Agents are encouraged to use the Project 100 model of network marketing — you start with targeting 100 people in your personal network.
• Upfront investment requirements: A $199 starting fee is required, as well as extra costs for training and licenses.
• Low success rates: The average annual income for 44% of paid agents was just under $400.

Is PHP Agency Safe and Legit?

PHP does follow the business model of an MLM, however, this doesn’t automatically mean it is unsafe or illegitimate (though there are plenty of obvious downsides). The company sells real life insurance products from reputable carriers and provides the opportunity for agents to earn commission by selling products and recruiting others.

However, like with most MLMs, success is limited to a small percentage of members. To illustrate this, agents begin at level 1 where they can receive 30% of commissions on sales. To move to level 2, where they can earn 40%, they must recruit 3 people, and get 3 additional applications for more recruits.

Since 50% is the baseline commission for many actual insurance companies, there’s no reason that you should be willing to start for just 30% (unless every other insurance company turns you down first). Also keep in mind that insurance agents, while they typically make most of their money from commissions, also usually make a baseline pay. However, this isn’t the cases for PHP agents.

The PHP Income Disclosure Statement is available for 2022. It features a chart that shows just how few agents are able to actually make a living with the company. For example, only 3.80% of paid agents make just over $35,000 per year. Another 44.10% of agents make less than $400 per year. What’s more, the fact that these are percentages from paid agents means that it isn’t taking into account all of the agents who don’t make any money. Companies like PHP try to make these sales ‘positions’ seem like full-time jobs but they simply don’t pay anywhere near a half-decent full-time job, even at entry level positions in basically every industry.

Also, the compensation plan provided by PHP Agency is extremely confusing. This confusion combined with a sense of urgency can cause associates to rely heavily on their upline to give them the information they need to be successful.

However, it’s likely that their upline doesn’t completely understand the points and commission system either. The company can then take advantage of the murk created by the confusing language and hide behind it should it receive any complaints of unfair business practices.

Perhaps one of the most disconcerting aspects of PHP is how it markets itself on its own website. It targets individuals through emotional campaigning, saying that the mission of PHP is to “provide financial education to the underserved communities in America”. It then gives a breakdown of the company’s sales representatives’ demographic data, based on race, gender, and experience, showing that a majority are LatinX or Black and women.

While at first glance it might seem positive that the company goes out of its way to hire minorities, the intentions behind it seem a bit more sinister. While the company claims to support minority communities, it actually preys on them by overpromising the amount of money they can make, as is typical of many MLMs, as these Redditors note:


Another concern with PHP Agency is the lack of transparency provided in the materials given to potential recruits. For example, in the New Associate Agreement, there is a section about refunding the $199 New Associate Fee. In that section, it says that associates have three business days to request their refund. However, their refund request needs to be reviewed by PHP, and if more than three business days have gone by after the enrollment date, then the associate will not receive a refund.

This suggests that even if the associate submits their request for a refund before the three business days have passed, if PHP takes too long to review their request, then they may still not get a refund. Here’s one person’s experience of the refund process on the Better Business Bureau site:

Wrapping up, there is no conclusive evidence of fraud or illegal activity within PHP Agency, as it operates under the regulations governing MLMs.

However, if you’re considering becoming an agent from this company, proceed with caution, and know that statistically, you are very unlikely to be able to make a living (or anything close to a living) working for it.

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