Dear Cecil:
My friend Dave is trying to organize a tontine. He says it's very simple. We each put an equal sum of money into an investment pool. Whoever outlives everybody else gets the money plus the accumulated earnings. What a strange concept! Put up your money, then hope for the ultimate misfortune to visit the other members of the group. I'm fascinated by the idea of it. What other chance do you have to gain from the deaths of your friends and acquaintances? It's the ultimate lottery. Who came up with this idea? Was it the forerunner of our current life insurance system? Have there been any famous tontines? Has anybody really raked in big bucks by winning a tontine? Should I join? --Barry Gardner, Washington, D.C.
Dear Barry:
This guy Dave--he doesn't have an odd gleam in his eye, does he? Tontines (pronounced TON-teens) are strange, but not as strange as he makes out. You don't have to wait until only one guy (presumably Dave) remains alive before they start paying off. On the contrary, they start paying off right away--the classic tontine basically is a weird annuity. You pay a specified nonreturnable sum of money and receive an annual interest payment for the rest of your life.
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