Return of the " Death Pool " !

A lot of people have a new worry !  Suppose they live longer than expected and exhaust the income that their superannuation provides  ?   That is a frightening scenario and advances in medical science are constantly pushing life expectancy to new limits.   We humans have now breached the " eighty " barrier and people reaching ninety are not unusual.

Murder mystery officiados and followers of Agatha Christie will be familiar with what was once called a " Tontine " and is also known as a " Death Pool ".   It was once a perfectly legal financial instrument in which a number of men contributed an even amount of money each and this was deposited with a secure company and invested to draw interest and increase in volume.

Usually, the starting point was a common age of the contributors of age fifty and the terms of the Tontine called for it to start distribution at an agreed age.   Suppose the pool of contributors was a hundred men.   By the time their common age reached seventy there would already have been some casualties - death from illness, accidents and perhaps the odd suicide.

This " Death Pool " would now contain a handsome profit on the original contribution but distribution would depend on what terms had been written in at setup and these differed wildly.  It usually depended on what constituted life expectancy then and what they guessed it might be nearing their life's end.  It usually nominated an age at which distribution of a nominated percentage would commence and edge upwards each year.  The last surviving pool member scooped what remained in the pool and usually died a very rich man.

The objective was to ensure that should a member have the good luck to live much longer than the average their needs would be taken care of by a financial dividend from the pool.   In fact, it was often a constituent written into insurance cover at that time, but it was just too tempting to writers of novels and featured in many murder mysteries.   Mysterious deaths amongst pool members reaching distribution age became a common theme and for some reason the Tontine was legally banned.

It is a perfectly logical way of ensuring that the " great unknown " - the length of time we each may live - is covered by living expenses and that is exactly how the life assurance industry actuaries calculate their policies.    The only difference is that instead of a nominated reward set at the outset, the distribution of the money is reliant on sheer luck deciding those who outlive the group.

Reactivated and legalised it could be a valuable instrument of estate planning.   Perhaps with appeal to the sporting instincts of many contributors !