tontia

A tontine is a form of investment where a group of individuals contributes to a common fund, with the gains from this fund distributed to the surviving members over a set period. The core principle is that as members die, their shares are reallocated among the remaining participants. This process continues until the end of the designated term, at which point the last surviving member(s) receive the entire accumulated fund.

The concept originated in the 17th century with Lorenzo de Tonti, an Italian banker. Tontines were popular for a time, particularly in France and England, as a way to provide annuities and often served as a more speculative alternative to traditional life insurance. They offered the allure of a potentially large payout for those who lived long enough, but also carried the risk of losing one's initial investment if one died early.

Due to their complex nature, potential for abuse, and regulatory challenges, tontines have largely fallen out of favor and are now uncommon. Many jurisdictions have enacted laws that restrict or prohibit them, viewing them as a form of illegal lottery or gambling. While the historical tontine is rare, some modern financial products may incorporate similar pooling and survivorship features, though typically within highly regulated frameworks.