Fixed term Savings for Terminally Ill

davey4201753

Hi. Aged 85 Ive been warned by Gp
of terminal illness. However he said
I could live for UP to two years
  I'm gathering my assets together to
make estate settlement easier
   However there doesnt seem to be
a 1 year fixed term plan which will
not be penalized for "early exit"
any advice welcome
Thanks

mebu60

Sorry to hear of your diagnosis.

Most, if not all, fixed rate savings will allow a penalty-free early closure for an exceptional event such as death of the account holder. 

eskbanker

Sounds like an unwelcome situation, but a couple of thoughts:

In the wider context of the size and content of your estate, plus the finances of your beneficiaries, would it be a problem if access to funds was to be delayed?

The rate gap between leading easy access rates and fixed term ones doesn't seem particularly substantial, so is it enough to offset the access disadvantages of the latter?

Kim_13

mebu60 said:

Sorry to hear of your diagnosis.

Most, if not all, fixed rate savings will allow a penalty-free early closure for an exceptional event such as death of the account holder. 

Related to the above, Shawbrook Bank would be one to avoid. A fixed product would (definitely ISA, but normal bonds may be similar) mature into a default account paying 0.1% if you were no longer around to give maturity instructions otherwise at the end of the term. A previous poster found that the funds were then stuck in that account for months while they awaited probate.

davey4201753

I had to close a roughly 150k fixed term
with bank of Scotland
penalty was over £1200. Showed them a letter re my diagnosis from GP but
Computer said "No"

jimjames

davey4201753 said:

I had to close a roughly 150k fixed term with bank of Scotland penalty was over £1200. Showed them a letter re my diagnosis from GP but Computer said "No"

Do you need the money now? If not then the penalty will disappear if the worst happens

Kim_13

davey4201753 said:

I had to close a roughly 150k fixed term
with bank of Scotland
penalty was over £1200. Showed them a letter re my diagnosis from GP but
Computer said "No"

I do wonder whether some providers are now effectively using the Lifetime ISA rules as a template, where a person has to have less than 12 months to live for a penalty free withdrawal. There will also be those refuse any access to the funds until the account holder has died, so they may argue that they were doing you a favour by allowing it at all. Although £1,200 is a lot the penalty looks as though it was around 1%, so not bad in percentage terms.

Might be worth a complaint regardless, which may flush out what time period they were looking for to enable penalty free access / get someone to look at it with more compassion. If they would have allowed penalty free with less than 12 months left (for example) then your argument would be that the prognosis for some conditions is less certain than others. Up to 2 years doesn't guarantee 1 year for everyone receiving the same diagnosis. If they would have allowed a penalty free closure at some later point but did not advise you of that then that might be a route to a gesture of goodwill from them.

Are there any particular products that you were interested in? It's worth looking in detail at the terms of those products. You might contact any that are not explicitly clear in order to get confirmation in writing- and keep a copy of that/the terms of the product highlighted as necessary with your will and/or discuss with your executor so that they know that they should expect nothing other than penalty free early access when you are gone. 

I recall Saffron Building Society's Savings Promises: they promise penalty free access if your circumstances significantly change and define a significant change as terminal or critical illness or death. As you already have a diagnosis I wouldn't expect early access if fixing now from them or anyone else with the same terms, but the inclusion of death should mean that your beneficiaries don't have any problems later.

Might you want access to any of the funds to enjoy your remaining time or to pay for treatment to extend your remaining time? If so, think carefully about how much you are re-fixing. I am assuming there are enough funds elsewhere to pay for funeral expenses etc, so that those left behind don't have to have the money released from a fix before they can settle the bills.