Summary: Merriam-Webster's Word of the Day for May 26, 2013 is: tontine \TAHN-teen\ noun : a joint financial arrangement whereby the participants usually contribute equally to a prize that is awarded entirely to the participant who survives all the others Examples: In the author's latest suspense novel, the participants in a secret tontine begin to show up deadone by one. "He had become interested in an insurance scheme called a tontine, in which people pool their money and the last survivor gets the whole pot. But tontines were now illegal." From Alice Schroeder's 2008 book The Snowball: Warren Buffett and the Business of Life Did you know? Tontines were named after their creator, a Neapolitan banker named Lorenzo Tonti. In 1653, Tonti convinced investors to buy shares in a fund he had created. Each year, the investors earned dividends, and when one of them died, his or her share of the profits was redistributed among the survivors. When the last investor died, the capital reverted to the state. Louis XIV of France used tontines to save his ailing treasury and to fund municipal projects, and private tontines (where the last surviving investorand subsequently his or her heirsgot the cash instead of the state) became popular throughout Europe and the U.S. Eventually, though, tontines were banned; there was just too much temptation for unscrupulous investors to bump off their fellow subscribers.
