TONTINE Meaning and
Definition
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Tontine refers to a financial arrangement or investment scheme in which a group of individuals contribute money to a common fund or pool, with the specific goal of receiving a share of the proceeds or benefits generated from the investment.
In a typical tontine, each member of the group contributes an agreed-upon sum of money, usually paid in monthly or annual installments. The funds are then invested to accrue interest or generate dividends over a specified period. At the end of this predetermined duration or when a specified event occurs, such as the death of a participant, the remaining members who are still alive receive an equal share of the accumulated funds.
The distinguishing characteristic of a tontine is its principle of survivorship, meaning that as more participants die over time, the shares of those remaining become larger. This creates a financial incentive for longevity as the longer a member lives, the larger their share of the final sum. Tontines were originally developed as a means of encouraging long-term financial stability and providing financial security for participants in old age.
While tontines have been used historically in different forms, they are not commonly found today due to their potential for misuse and controversy. Some concerns with tontines include issues related to unfair distribution methods, ethical dilemmas surrounding the financial gain from others' deaths, and complexity in administration. Modern financial regulations typically restrict or prohibit the use of tontines.
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A form of life-insurance in which no dividends are paid until the end of a specified period, at which time the profits are divided among the survivors and those of the same class of insurance who have kept' their policies in force.
A practical medical dictionary. By Stedman, Thomas Lathrop. Published 1920.
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An annuity of survivorship; an annuity being shared equally by several individuals, the equal share being increased by the death of successive annuitants until the whole goes to the last survivor, or to the last two or three, according to the original agreement.
Etymological and pronouncing dictionary of the English language. By Stormonth, James, Phelp, P. H. Published 1874.
Common Misspellings for TONTINE
- rontine
- fontine
- gontine
- yontine
- 6ontine
- 5ontine
- tkntine
- tlntine
- tpntine
- t0ntine
- t9ntine
- tobtine
- tomtine
- tojtine
- tohtine
- tonrine
- tonfine
- tongine
- tonyine
- tontinr
Etymology of TONTINE
The word "tontine" is derived from the name of Lorenzo de Tonti, an Italian financier who lived in the 17th century. He developed a financial scheme known as the "tontine" in the 1650s, which was initially used by the French government to raise funds. The tontine system involved individuals pooling their money into a common fund, with the understanding that the last surviving member would receive the entire sum. The word "tontine" became associated with this concept and has been used to refer to similar financial arrangements ever since.
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