Tontine

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The tontine or tontine insurance or the tontine business , as the tontine is called in the German Insurance Supervision Act (VAG) , is an early form of pension insurance .

In the case of a tontine, a life insurance company or the state, as a so-called "organizer", undertakes to accept payments for a fee and to return the accumulated capital at certain times to the depositors who are still alive at certain times.

The principle of the tontine can be illustrated using the example of a knockout tournament .

For example, if 64 players take part in such a tournament, the pricing scheme could look like this:

  • Before the start of the first round, each of the 64 participants pays an entry fee of € 1 - corresponding to the mise (i.e. one-off premium, actually French stake) for a tontine.
  • After the third round - in the case of a tontine, this corresponds to the deferral or waiting period  - a first payment of € 16 is made: each of the eight “survivors” thus receives € 2.
  • After the fourth round, there is a second distribution of € 16: Each of the four “survivors” now receives a further € 4.
  • After the fifth round there is a third distribution of € 16: Each of the two “survivors” now receives € 8.
  • After the sixth round, the last payout takes place: The winner of the tournament as the last “survivor” receives another € 16; his total payout from all rounds is therefore 2 + 4 + 8 + 16 = € 30.

The tontines were named after their inventor, the Italian banker Lorenzo de Tonti (* around 1602, † 1684). At the instigation of Cardinal Mazarin, he set up the first tontine in Paris in 1653. Tontines were particularly popular in Latin countries.

In France, soon after its invention, the clay business was run by the state. This got into financial difficulties and gave up the business again. The last major tontine was established in 1759.

Tontines are not part of the insurance business in the narrower sense: The essence of the tontine lies in the fact that the organizer bears no share in the insurance risk of longevity. This risk is borne entirely by the participants, i.e. the community of insured persons.

In modern life insurance mathematics, the tontine lives on in that policyholders in endowment life insurance participate in the actual mortality rate via the so-called “natural surplus” or “profit sharing systems”. You are indirectly involved in the risk by allocating the accumulated surpluses to the survivors year after year.

The combination of life insurance and lottery widespread at Tontinen has been preserved in the so-called "draw insurance ".

Tontines are practically non-existent in German-speaking countries and are not offered by insurance companies. In France and in English-speaking countries, tontine shops are still common today. There they exist in particular as contracts between communities of persons. In addition to death, other criteria for departure can also be agreed.

Tontines also play a significant role in various crime stories , for example in The Wrong Box by Robert Louis Stevenson and in 4:50 from Paddington by Agatha Christie .

Tontines in West Africa

The local savings and credit groups, also referred to as tontines (see Tontine (Africa) , ROSCA ) in the various countries of West Africa such as Cameroon , which also have a social significance due to their cooperative character, correspond more to a collective savings business (see Bausparkasse , Collective building society savings ) and have only the name in common with the classic tontine.

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