Help clients find lost bank accounts and insurance policies

If an insurance policy or bank account is lost, is it lost forever?

Not necessarily. Lorne Marr, director of business development with Woodbridge, Ont.-based LSM Insurance, a division of Hub Financial, has had 50 to 60 clients ask him about a lost insurance policy in his more than two decades as a CFP.

In one of those cases, the child of a deceased client thought their parent had an insurance policy that Marr wasn’t aware of. After taking Marr’s advice to look through filing cabinets, safety deposit boxes and computer files, the child found a group policy on a pay stub from a former employer. “You’ve got to do that detective work,” Marr said.

Canadians can also lose track of their insurance policies and bank accounts during major life changes such as relocation or divorce. As of July, the Bank of Canada held nearly 2.8 million dormant accounts worth about $1.16 billion — and the number and value of unclaimed accounts increases every year, the BoC said.

Online resources exist for tracking down missing insurance policies and bank accounts, but financial advisors suggest it’s better to stay organized.

The OmbudService for Life & Health Insurance’s (OLHI) search tool allows clients to submit a search request for a deceased person’s insurance policy if no more than two years have passed since the person’s death. The OLHI reviews the information and sends a request to member companies, who will contact the client directly if a policy is found.

Nearly all Canadian insurance companies are OLHI members, but policies issued by non-member companies and group policies won’t be listed. In addition, life insurance policies on credit cards or purchased through an association like Costco or the CAA may not show up, Marr said.

Advisors can also search for and claim dormant bank accounts held by the Bank of Canada. However, this database only includes accounts that have been inactive for more than 10 years, so searches for newer accounts should be directed to the consumer bank holding the account. An account that’s been taken over by the Bank of Canada will only be held for a limited time: 30 years if the balance is less than $1,000 or 100 years if it’s over $1,000.

Although these two databases can help, maintaining updated records is much easier than reclaiming lost accounts and policies. Financial advisors suggest checking in with clients regularly, providing them with a filing system and keeping executors updated.

Tina Tehranchian is a CFP and senior wealth advisor with Assante Capital Management Ltd. in Richmond Hill, Ont. Her firm had a client who moved to the U.S. but didn’t tell her advisor the new address. Three months later, a life insurance policy lapsed because the insurer couldn’t notify the client that they had insufficient funds for the premiums in their Canadian bank account.

“That’s why it’s so important to make sure that the insurance company has an updated address,” said Tehranchian. “Prevention is the best policy.” She provides all her clients with a binder to organize their financial information and encourages them to both update it regularly and let their executor know where to find it.

Clients aren’t the only ones who change addresses. Insurance companies could also change hands during mergers, and records could get lost in legacy systems. In such cases, the OLHI might not be able to help as it relies on the insurance companies’ records, said Wendy Brookhouse, a CFP and founder of Black Star Wealth in Halifax.

Brookhouse suggests financial advisors communicate with their clients at least once a year and maintain a summary of all bank accounts and insurance policies. She advises saving master lists on the cloud so an executor can access changes in real time.

Staying in touch with clients could also be good for business. “If you did a 15-minute call 15 times over 20 years, you’re going to have a good idea [of] what you have,” Marr said. “It’s also a great way for advisors to … get referrals.”

Correction: This article has been updated to clarify the OLHI’s search request process.

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.