Tontine is an investment plan in which participants buy shares in a common fund and receive an annuity that increases every time a participant dies.
In simpler terms, tontine is an investment scheme in which the so-called shareholders create a common investment pool and derive some form of profit or benefit (usually financial) while they are alive. After the death of the shareholder their share gets split between the surviving shareholders in the pool and is not subject to inheritance rights. Tontine investment comes to an end when the number of surviving shareholders in the pool reaches a previously agreed on, small number.
[Last updated in June of 2022 by the Wex Definitions Team]