TONTINE'. This term is derived from the name of Tonti, a Neapolitan, who seems to have been the first propounder of a-scheme for a financial association of which the prize or prizes were to accrue to the longest liver or livers. Generally, in an association on what is called the tontine principle, a payment is made by each member of the asso ciation, and with the capital so formed, an annuity, payable at the same rate until all the lives forming the association are extinct, is bought from some company or individual. This annuity is divided among the members according to age and premium paid by each; and on the decease of any member, the surplus thence arising is divided among the survivors; and on the death of the last member of the association, the total annuity reverts to the source from which it has hitherto emanated. There are, however, various kinds of tontines; and the designation of tontine may, with propriety, be applied to any financial scheme by which it is proposed that gain shall accrue to survivorship. In England, tontines have rarely been resorted to as measures of public finance. The last for which the government opened subscriptions was in 1789.—See Hamilton's History of Public .Revenue, p. 210. Schemes on the tontine principle seem generally to be accept able to the public, owing, probably, to the sort of sentimental faith which most persons have in their own prospects of longevity, and to the prudent desire for ease and afflu ence in old age. The application of the principle by life assurance companies in their mode of distributing "bonus," or surplus profits, has long been a subject of controversy among these valuable institutions. It would be impossible here to go into the argument
with any degree of nicety. It may, however, be broadly stated as follows: A company formed for the purpose of life assurance means a company in which the members who are lucky in having long life are to pay for those who are unlucky in dying prematurely. But over and above the net mathematical premium payable by each member of an assur ance society, or by each person assured at the risk of a company, a percentage, or "loading," as it is technically called, is added, to cover expenses of management and other contingencies. Where the funds of the company or society have been invested with average success, the loading is generally found, at the periodical actuarial investi gations, to have been in excess of actual requirements; and the question then arises, How are " profits," or, in other words, the overcharges on premiums, to be divided? The question is plainly one of great intricacy. The argument used by the offices favoring the younger policy-holders is, that those which favor the older are really acting on a ton tine principle, which is the very converse of what ought to prevail in life assurance; on the other hand, it is said that the fulfillment of the insurance contract is provided for by the net premium, and that the distribution of over-payments, as "profits" really are, is to be determined on principles wholly independent of insurance. See " Notes on the Early History of Tontines," by J. Hendricks, in the Assurance Magazine for July, 1862.