Definition - What does Tontine mean?

A tontine is a situation in which a group of people invest in something and returns or profits are passed along to the other members of the group upon the death of one of the members.

Annuities are an example of investments made in a tontine. In the context of the law, tontines are illegal in many places in the United States.

Justipedia explains Tontine

If a number of people invest in a tontine, the last remaining member of the group gets all of the shares that have accumulated as each person in the tontine dies and passes along their shares. This means that whoever lives longest can gain a significant amount of assets from the tontine.

Certain life insurance policies can also be purchased in a tontine style. With life insurance, death benefits would still go to the policyholder's beneficiary. However, any dividends or annuities would go to the tontine.

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