Tontine

An arrangement very similar to joint tenancy, between several people whereby they all, initially, share the profits from some investment but once only one of the initial investors survives, said investment accruing fully to the last survivor.

Tontine were some of the earliest forms of life insurance.

In a Canadian case (Hrynko), a Manitoba judge used these words to describe a tontine:

"A financial arrangement (such as an insurance policy) in which a group of participants share advantages on such terms that upon the default or death of any participant, his advantages are distributed among the remaining until only one remains, whereupon the whole goes to him....

"(T)he tontine played an important role in the development of the modern life insurance industry."

Article 2(2)(a) of the Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 Concerning Life Assurance describes a tontine as follows:

"tontines ... associations of subscribers are set up with a view to jointly capitalising their contributions and subsequently distributing the assets thus accumulated among the survivors or among the beneficiaries of the deceased."

REFERENCES:

• Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 Concerning Life Assurance, published at Official Journal L 345 , 19/12/2002 P. 0001 - 0051.
• Duhaime, Lloyd, Legal Definition of Joint Tenancy
• Hrynko v Cole 2005 MBQB 197 published at www.canlii.org/en/mb/mbqb/doc/2005/2005mbqb197/2005mbqb197.html