Document Type

Article

Publication Date

2009

Abstract

A tontine is an investment scheme through which shareholders derive some form of profit or benefit while they are living, but the value of each share devolves to the other participants and not the shareholder's heirs on the death of each shareholder. The tontine is usually brought to an end through a dissolution and distribution of assets to the living shareholders when the number of shareholders reaches an agreed small number.3

If people know about tontines at all, they tend to visualize the most extreme form - a joint investment whose heritable ownership ends up with the last living shareholder. The all or nothing nature of that form is memorable. The last survivor principle has been the basis for a number of dramatic works whose plots hang on the machinations of a tontine participant to murder his co-investors to insure the core property reverts to him.4 In fact, tontines are far more innocuous and served as aimportant step both in developing modem insurance plans and providing some of the earliest reliable actuarial data on which the later insurance plans could be developed.

Since tontines have been neglected for many years, this Essay is primarily concerned with providing background information. It covers the history of their development and the broad variety of uses they have served from the 17th to the early 20th centuries. It concludes with a brief exploration of the revival of the tontine as a possible addition to the range of modem financial tools.

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