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Sounds like it would escalate the murder rate big time.
How so? Do you have a list of everyone that buys life insurance from the carrier you use? Do you have a list of who is invested in all the mutual funds you invest in? Why would you assume you'd get a list of the people that participated in a tontine with you? I'm pretty sure you wouldn't.........
In 2015, John Barry Forman and Michael J. Saban, using modern actuarial techniques to calculate fair transfer payments when participants are different ages and have made different contributions, proposed a new structure of pension plan on the tontine model, through which large employers could provide retirement income for their employees. They argued that tontine pensions would have two major advantages over traditional pensions, as they would always be fully funded, and the plan sponsor would not be required to bear the investment and actuarial risks.
Illinois had something very similar fifty years ago. It may still be available. It was a life insurance policy coupled with an increasing payoff for remaining survivors. It would seem to be better, however, without the traditional insurance feature. If these are available it would be easy enough to determine the sum of present value based on a combination of actuarial projections and fees. If social security could be at least partially privatized people could place part of their social security taxes into this. It could certainly be a part of private pensions and individual investments.
There wouldn't be any need for medical examinations before entering. People would determine their own risk levels since those who died at earlier ages would receive less. As long as it's managed soundly and planned correctly (that's why there are actuaries) it would add another option for old age income. People reading this are generally be too old for a reasonable buy-in, but this probably isn't the last generation of humans.
I just downloaded the free sample for this. I'm almost certainly too old to benefit, but it looks fascinating. I love learning about new (in this case, old) things.
How so? Do you have a list of everyone that buys life insurance from the carrier you use? Do you have a list of who is invested in all the mutual funds you invest in? Why would you assume you'd get a list of the people that participated in a tontine with you? I'm pretty sure you wouldn't.........
The whole idea of a tontine is that you have proof that its members have or haven't, in fact, died. How easy for a long-con thief to set up hundreds of these and then cheat the final member by keeping a straw member on the books, if the individuals don't know each other.
Given your first comment about inflation and now this one about high fees, something tells me you haven't bothered to read the article. As explained therein, one of the main advantages of tontines
Is that costs are reduced because the middleman (for example, insurance companies with respect to annuities) is cut out.
So are we picking our own tontine groups then through private contracts? Or is the government randomly selecting after dividing people up by age?
I agree with the majority of the other posts.
There's a fear and greed motive that is highly prevalant in the human species.
Whenever someone profits over another person's death, no good can come out of it
I don't see a problem with getting a higher payment if others in the group die. It's not a personal affront to the decedent, it's just simply the way the plan works. What I would question is, what entity administers the fund, what are the fees and how high can they go, who are the watchdogs, and what are the possible pitfalls for corruption.
I'm not so sure I wouldn't be interested in this. I've always been interested in annuities, but I don't like the fact that the amount you start out with is the amount you get 'til you die, unless you get a COLA rider, but that usually only lasts a few years. A tontine would sort of take care of this.
One problem I see is the fact the insurance company would have to stay on top of those investors that have died, not necessarily an easy task. It's not uncommon for someone to buy an investment and not tell a family member, even a spouse. If a payment is returned from the investor's bank, then the company has to try to find out why, again, not necessarily an easy task. But, all in all, I can see some benefit to a tontine.
Two drawbacks: inflation and 'unexplained deaths'. No thank you.
It will go up over time, of course, as members of the group die.
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