Goldsboro weekly argus. [volume] (Goldsboro, N.C.) 1885-1909, 1894-05-10
What is Tontine
AND
Semi-tOnfine Insurance?
the Weekly Commercial Nows
and Insurance Record. San
Francisco, Cal.

and Insurance Record, San
Francisco, Cal.
"IE Tontine plan of insul ance
q has nov been something over
% twenty yearsin existence. It was
introduced by the Equitable,
New<Yosk Life ana Mutual Life. and
almost wholly by the North Western
Mutual of Milwaukee. But the Mutual
Lille speedily abandoned it. and during
the lifetime of It's then president CON
tinued to be d bitter opponent of the
system. THE Mutual Life. under
President Winston, condemned the
Tontine scheme and refused TO practice
successor IN office, thai company has
adopted what is known as the Five, Ten,
Fifteen and Twenty Year distribution
Plan" This is only Tontine under a
different name. AS in all other Ton.
tine plans, all dividends are withheld
until the end of the Tontine term. and
the withheld dividends are confiscated
IN case of death or lapse before that
time. The Distribution Plan includes
all OF the Objectionable features of the
Eontlue plans of other companies The
formet companies, however, have
pushed it vigorously ever since, with
various notifications, and other com
panles. realizing the advantages the
plan gives the company. have, n af-
ter another. adopted it under various
names, until but few are left which
still refuse to have anything to do
With it.
Iontire as practiced previous to
1883. was applicable to all kinds Of pol
icies taken at regular rates. A tontine
period of ten. fifteen OF twenty years
vas fixed upon in the policy, and du--
ing that period full premiums had TO
% paid, no dividends being allowed
lntll the completion OF the period.
During the tontine period the policy
Dad no surrender value either in cash
o. in paid up insurance, but in the
event of the death of the insured the
face of h policy was payable to the
beneficiary, but without any share OF
the profits. A failure to pay the pre-
MUM when due from any cause. for
feited every cent that had beer pre-
vious1y paid in. and the mounts thus
!contiscated We're supposed to be pooled
and divided up among those who per-
! sisted 20 the end. Each one believed
that he would be among the fortunate
ones, and he expected to real eXtraor-
binary profits out of the misfortunes of
his less favored brethren, who. from
The very fact that they would be una
Die to keep up their payments. could
least afford to be despoiled of what
5hey had already paid in.
| n Is what is called Tontine Lie
Insurance. Tontine robbery would be
a more appropriate name. The man
who robS d bank receives a certain
amount of respect when compared with
one who robS a poor widow. and this
IS just what the tontine company does.
Amounts which in n~on-tontine compa-
MES would purchase paid-up insurance
fokthe benefit of the widows and chill
1ren of those who had paid them in.
are r~uthlesSIy cOnfiScated by the ton
line companies to add to the profits of
those who are better off, and therefore
better ab1e,to meet their payments, and
these last. when the day of settlement
comes, as a general thing are not sat
listed with the share of the swag allotted
Jhem. but clamOr for mroe. The dis
lcrepancies between the promises of the
agents at the time of insuring and the
results realized at the completion OF
the tontlne period have been so great
that numerous lawsuits were brought
by disappointed victims to compel an
accounting, and the only result was to
show that the companies were absolute
masters of the situation. and could do
what they pleased with the pool. while
the policy holders had no legal redress.
and were compelled to accept whatever
amounts the companies chose to offer
them as their share of the profits. The
agent promises were found to be alb
%solutely worthless, and we're utterly re-
pudiated by the companies.
The result, however, was the prac-
ltlcal abandonment of tontine about
1883. when the companies were pre-
pared with a substitute in the shape OF
lsemi-tontine. This differs from ton
Il no i'm nna JASJOnaf OnIy nx,~1- -
cease of failure to pay premiums during
the seml-tontlne period, the net reserve
is available for the purchase of paid
up insurance. but all over this amount
is confiscated. The difference is in de
gree only. 1t is the difference between
robbery and petty larceny. AS an off
set against the loss of the reserve OF
the pool, the rates in this class of pol
licies have been considerably advanced
over those formerly charged for ton.
tine.
The companies practicing this sys
tenn excuse it on the ground that the
public demand it. and that is proved
by its phenomenal success. A similar
argument would apply with equa
force in Xcu for lotteries, gam
bling houses. n worse. 1t is
true people will take it who canno-
be persuaded to take legitimate insu
IIdICO. l1ACy WILL OdhO Ii IOE U10 gain
BILE there is in it, for the tontine in al
forms is gambling pure and simple. L
} is gambling in which the stake is the
protection of families: gambling il
which the stake holder need pay ovel
only what he pleases of the winnings
and the winner has no redress. for nc
one but the stake holdor can ever know
what the winnings really amount to
or what has been done with them.
It may be asked, then. why are 81
many of our largest companies engaged
in semi-tontine in preference to legiti
innate life insurance? p The special com
%1nittee appointed by the New YORK
Legislature in 1885 to investigate ton
tine life insurance, in its report sup
piled one answer. It alludes to the de.
velopment of the system in this coun
; try by the company (which introduced
the plan in 1868, and whose efforts il
this direction. if not prompted by rea-
sons similar to those which actuateG
t the French government in 1889, namely
e+to replenish an exhausted treasury
seem at least to nave been intensified
by a desire to obtain, through The for
fixture of immense sums, a fund which
: lcould be drawn on ad libitum for the eX
: pense of a most -eXtravagant manage
!, lment."
There is another reason. however
l THE gamble is represented in SO at
~tractive a form; the great danger Q
I loss is SO carefully kept out of sight
, the profits promised Thy the agents. ar
, I.o lonoo I'D 4H1 +ho m,oo5 on1 Al,