Tontine Life Assurance-What is it?

Manawatu Standard, Volume IV, Issue 204, 25 July 1884, Page 2

Tontine Life AssuranceWhat is it?

Tontine assurance derives its name fioni the original founder of annuities ami lite assurance, one Lorenzo Tonti, h NoapolitanUe, who flourished m about the middle of the 17th century, his first plan being as follows : — A certaiu number ot persons clubbed together a specified sum, which was invested, ami the interest at the end of each y<-ar was divided amongst the subscribers who were living, and so on from year to year, the number gradually decreasing, until the last survivor received the whole of the interest until his death. The scheme had all the appearance of a profitable investment until after the death of the last annuitant, when enquiry was made as to what became of the principal sum, for which there appeared to be no owner, and it was found to have been appropriated by the founders of the scheme. This proved fatal to the plan, and thereupon a . modification of the system was adopted. A tontine was fixed to continue a certain number of years, and the entire amount was to be received by the member who last survived. The present system of Tontine life assurance differs materially trom the plans above mentioned as originated by Tonti, and combines the advantage of life assurance with a portion of the element of the Tontine system, and as we understand, it, is as follows: — Tontine policies are issued at the same rates and under the same conditions as ordinary life assurance un« der the " with profit" scales, with the exception of if the assured, die within the continued period, say 10, 15, or 20 years, as the case may be, his representatives will only receive the full amount of his policy without any profits attached. Those who discontinue their payments, and thus allow their policies to lapse, receive no surrender value, nor any profits attaching to their policies, bub one calendar month's^ grace is allowed on payment of a tine. The members who survive the Tontine period, having kept their policies m force, then participate m a division of the accumulated profits of the Ton fine, which are much larger than under the ordinary plan, and can be drawn m cash or added to their policies, or m other ways which ■will be found iD the prospectus of. the society mentioned below. This appears to be a fair and equitable plan, as there is no loss to those who die early after having paid ouly a few premiums ; m fact their repre sentatives are considerable gainers by receiving the full amount assured, while those who survive the period, and have thus contributed to and earned the profits, are entitled to reap the full benefit thereof. It will be seen by Reference to our ■ advertising columns, that the Tontine iuvestment policy system, combining an investment for capital protected by life assurance, is for the first time offered m New Zealand by the Colonial Mutual Life Assurance Society, which was established m 1873, and is incorporated under the Acts of Great Britain and the Australian Colonies. This office has been very energetic and successful m ite operations, and has accumulated a large, amount of funds, which are all invested m the colonies. It has a branch m each colony on a federal basis, and is enabled to issue policies without delay and pay all its claims on the spot immediately on proof of title. Its policies are peculiarly free from all harassing conditions and restrictions as to travel, residence, occupation, or mode of death, and we understand the Tontine system is being pusheJ with that energy and perseveranoe which has hitherto characterised the management of this office. Although a new feature m this much-assured colony, the Tontine system has been m practice for the last 10 years or more m America and England. It has mcc with very considerable success m older countries, and has^become deservedly popular, as it ensures much greater profits to those who live out the period selected and whose contributions earn the profits, while those who are unfortunately taken at an early period, leave a substantial benefit to their heirs of the full amount assured.