NOTES ON REFERRALS

MYTHS ABOUT LIFE INSURANCE REFERRALS

Reality: People introduce you when your message aligns with their internal needs. Put another way people will refer you for the same reasons they make other decisions. Focus a subjects attention on the ideas that most align with their internal needs and they will take action.

Reality: If you wait, you lose. The best time to ask is when interest is high or when someone specific is mentioned whom you wish to meet.

Reality: This isn’t a trade. Good CPAs, attorneys, and financial advisors introduce people who they believe are exceptional at what they do. As a life insurance advisor you are in a unique position – even more than other fields the quality of your average competition is terrible. Professional’s should work with you because of your expertise and skills and I will tell you from experience they will be grateful for your time.

Reality: Even prospects who don’t buy from you can introduce you to someone who will. Someone who doesn’t qualify for your product may know the perfect person who will. Someone who absolutely won’t leave their advisor because of loyalty may be willing to introduce you to their entire network – simply because they like you and the advisor didn’t ask.

Reality: It absolutely can be. Because if your request isn’t presented in a way that aligns with the subjects internal dialogue you’re going to be in conflict. However if framed correctly asking for referrals feels natural and beneficial to the referrer.

Reality: This isn’t really a myth, its actually true. Its in here thought to highlight the fact that while some referrals may happen organically, most require prompting. If you’re not proactively setting the stage for introductions, you’re leaving potential business untapped.

The Psychology of Referrals

People don’t refer you because they owe you. They refer you because it fulfills deep psychological needs—needs that are wired into human behavior. Understanding these motivations allows you to engineer a predictable flow of high-quality introductions. Here’s what actually drives referrals:

Reciprocity – They feel compelled to return the favor. When someone perceives they’ve received great service, a valuable insight, or a meaningful experience from you, they experience an internal pull to give something back. A referral is an effortless way to reciprocate while maintaining their own self-image as fair and appreciative.
Altruism – They genuinely want to help their friends and family. Some people introduce you because they believe in what you do and feel a moral obligation to ensure their loved ones don’t go unprotected. This pairs with fear-based motivation—they worry that if they don’t share your expertise, someone close to them might suffer financial consequences.
Altruism – They genuinely want to help you. If they respect you, like you, or see you as a valuable person, they’ll refer out of goodwill. The key is making them feel like they’re contributing to your success in a meaningful way.
Status Boost – They want to look good to the referral. By introducing you to someone important in their life, they elevate their own status. This pairs with association bias—aligning themselves with a credible expert enhances their own perceived credibility. Combined with social currency, making referrals makes them look knowledgeable, resourceful, and well-connected.
Status Boost – They want to increase their social standing with you. Some people refer because they want to earn your favor, admiration, or attention. If they see you as successful or influential, making a valuable introduction solidifies their place in your network and strengthens their connection to you.
Ego Gratification – They enjoy feeling like an influencer or decision-maker. Referring someone positions them as a gatekeeper of opportunities and gives them a sense of importance. People love being the person who “knows a guy” and enjoys the influence that comes with making introductions.
Guilt Avoidance – They don’t want to feel responsible if something bad happens. If they know you provide an important financial safety net, they may refer simply to avoid the guilt of not taking action if something were to happen to their loved ones. This motivation operates at a deep subconscious level.
In-Group Loyalty – They want to help their social, cultural, or professional group thrive. People have an innate drive to protect and support those in their inner circle. If they see you as a beneficial resource, they’ll introduce you to people in their tribe to strengthen their community.
Scarcity Effect – They see you as an exclusive resource. If they believe your services are limited or only available to select individuals, they’ll feel privileged to refer someone. Creating the perception of exclusivity makes people more eager to make introductions.
Social Norms – They follow what others are doing. If they were referred to you by someone they respect, or if they see others actively referring you, they feel a subconscious push to do the same. People don’t want to be the ones who break the pattern.
Need for Closure When They Haven’t Purchased – They refer to resolve their own uncertainty. Some prospects hesitate to buy but don’t want to leave the interaction feeling incomplete. Making a referral allows them to “close the loop” in their mind, giving them a sense of resolution without committing themselves.
Path of Least Resistance – They find it easier to refer than to say no. Some people struggle with outright rejection, especially when they like or respect you. Instead of saying no to your offer, they default to referring someone else as a way to disengage while still feeling helpful. This allows them to escape discomfort while maintaining goodwill.

Your job? Trigger these motivations and make referring you the most natural, status-enhancing move they can make.

Easy Referral Strategies

Here are some easy referrals for life insurance agents and financial advisors to pick up:

The “Pre-Commitment Close”

After you’ve shared information, if not proceeding with the paperwork / close right away ask them for some feedback on your process.

Was it easy? Was it interesting? Was it useful? What did they learn that they didn’t know before? And then you ask.

‘It’s surprising how many people don’t know xyz or get poor advice…. (give some examples)… Is there anyone you know who would benefit from this information/process?’

The Connectors Ego / Mentor Referral

“I know you’re well connected in the local business community, if you were in my shoes who are the 2 or 3 people that you would absolutely have to speak with?” “How would you approach them?” “Would you mind…”

Guardians, Guardians and Trustees

This one is a give me. When writing a policy for a couple with children you have to provide a trustee. The trustee is usually the person the couple wants to be the child’s guardian. Arrange to meet them to explain what you have done and approach them at the same time.

The Unqualified Buyer

Someone can’t buy because of circumstances? Be it cash flow or medical conditions, take advantage.

“It’s a shame we can’t move forward on this and I know if I had met you and we had this conversation x years ago you’d be in a much better place. Do you know anyone who may be where you were x years ago who would benefit from having this conversation?”

The “Scarcity Referral”

Tell them you only work with a select group and how many more people you are looking for.

“I typically only work with a handful of families who don’t own businesses each year. I’m still looking for 6 or 6 more this year. Do you know anyone who <describe what you’re looking for> who would be interested in this opportunity?”

Offer a Referral Guarantee

“If you refer someone and they don’t get value from our conversation, I’ll send them a gift card for their time. No risk, just value.”

The Connector

Instead of asking for referrals to sell insurance, say:

“I’m building a network of successful people, similar to you, who care about their family and want access to the latest updates/products/information. Who do you know that fits that mindset?”