Legal Dictionary of Pakistan

tontine policy

An insurance policy in which a group of participants share advantages so that upon the default or death of any participant, his or her advantages are distributed among the remaining participants until only one remains, whereupon the whole goes to that sole participant. ( Under the tontine plan of insurance, no accumulation or earnings are credited to the policy unless it remains in force for the tontine period of a specified number of years. Thus, those who survive the period and keep their policies in force share in the accumulated funds, and those who die or permit their policies to lapse during the period do not. This type of policy takes its name from Lorenzo Tonti, an Italian who invented it in the 17th century. Today, newer and more ingenious forms of insurance have largely made tontine policies defunct. See TONTINE.