Tontine Insurance and the Armstrong Investigation: A Case of Stifled Innovation, 1868–1905

Roger L. Ransom and Richard Sutch

The Journal of Economic History, 1987, vol. 47, issue 2, 379-390

Abstract: Tontine insurance, introduced in 1868, combined the features of life insurance with an unusual old-age saving plan. A portion of the annual premium was accumulated in a fund that was divided among the surviving policyholders after twenty years. By 1905, two-thirds of all life insurance in force was of this type. Despite consumer appeal, sales of tontine policies were prohibited in 1906 after the Armstrong Investigation charged the tontine business with corruption and extravagance. We argue that tontine insurance was actuarially sound and an attractive life-cycle investment. Prohibition was probably unnecessary.

Date: 1987
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