Advertisement

Tontine

  •  
  • A tontine is a financial instrument with an interesting history. We will examine the meaning of the word tontine, where it came from and some examples of its use in sentences.

    A tontine is a financial instrument in which investors deposit money and are paid annuities. When an investor dies, his portion of the annuity is divided among the surviving investors instead of passing to his heirs. When the last investor dies, the principal most often passes to the state. The first tontine was organized in the Netherlands in 1670. The term tontine was derived from the man who invented the investment scheme, Lorenzo de Tonti. Tontines were popular in Europe and the United States during the nineteenth century, but they were outlawed in most places in the late 1800s. The motivation to murder fellow investors in order to receive a higher annuity was deemed to great to allow tontines to continue. Interestingly, as a certain few people end up living longer than many of their peers and outlasting their savings, there is renewed interest in designing a new type of tontine system.

    Advertisement

    Examples

    Tontines became so popular that historians credit them for single-handedly underwriting the ascendance of the American insurance industry. (The Washington Post)

    The tontine is an investment scheme where each of a group of participants pays a specified sum into a fund and receives a pro rata share of the income generated by the fund, but when a participant dies their share is divided among those remaining. (The Huffington Post)

    So a tontine, then, is not only a bet that you’ll live for a while — meaning it makes sense to give someone a bunch of money in exchange for regular payments over a number of years in the future (which is what an annuity does for you, more or less) — but that other people will die before you do. (The Business Insider)

    Advertisement

    Speak Your Mind

    About Grammarist
    Contact | Privacy policy | Home
    © Copyright 2009-2014 Grammarist