Tontine

From Academic Kids

A Tontine is an investment vehicle which is an odd mixture of group annuity, group life insurance, and lottery.

The tontine is named after Neapolitan banker Lorenzo de Tonti, the father of explorer Henri de Tonti. Lorenzo de Tonti invented the scheme in France in 1653.

Each investor pays a sum into the tontine. The funds are invested and each investor receives dividends. When an investor dies his or her share is divided amongst all the other investors. This process continues until only one investor survives who receives all of the remaining funds. Originally the capital reverted to the state when the last subscriber died and was used to fund public works projects, and these works often contained the word "tontine" in their name.

While once very popular in France, Britain, and the United States, tontines have been banned in Britain and the United States due to the potential incentive for investors to kill one another in order to increase their shares in the scheme. But there are underground organizations in the US where people still use the tontine. Due to this the tontine has often been the plot device for mysteries and detective stories.

A tontine is the premise for The Wrong Box, a novel by Robert Louis Stevenson, made into a movie by Bryan Forbes in 1966 starring Peter Cook, Dudley Moore, Ralph Richardson, Michael Caine and Tony Hancock. A more innocuous tontine was the subject of a M*A*S*H episode in which Colonel Potter, the last survivor of his World War I unit, inherits a case of brandy with which to toast the memory of his old comrades. In an episode of The Simpsons, Grandpa and Mr. Burns, having entered into a tontine during World War II, struggle with one another over the treasure, a safe filled with contraband paintings.


In cryptography a Tontine is a secret sharing algorithm which allows n people to share secret data, such that any k of them can reconstruct it by combining their keys.

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