Wednesday, September 30, 2015
The tontine is little heard of this day and age aside from the random references in shows such as Archer but it once ubiquitous in the American insurance industry. Up until the early 20th century, tontines were popular with retiring workers since a policy would promise an increasing stream of income as other members died off. Ultimately, the last survivor would be taking the entire payout that might have once been split among dozens. But scandals surrounding the insurance industry, and their management of tontines in particular, lead to their downfall after New York set off a wave of prohibition by states against the scheme. However, some now argue that tontines are a legitimate estate planning devise that, if revived in a modern setting, would offer greater security to members that lived to an age that often requires huge sums of money to maintain ones self. What future the tontine might have in estate planning is highly uncertain but as new retirement alternatives are sought it's time might arrive again.
See Jeff Guo, It’s sleazy, it’s to, tally illegal, and yet it could become the future of retirement, The Washington Post, September 28, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.