11 ms·
The pandemic revives interest in a morbid French financial scheme
- gjvc 5y agosee also https://en.wikipedia.org/wiki/Tontine https://en.wikipedia.org/wiki/Tontine
- nathanvanfleet 5y agoLike the episode of the Simpsons?
- rundmc 5y agoThe condensed Simpsons Tontine episode https://www.youtube.com/watch?v=4AqKjjhET2k https://www.youtube.com/watch?v=4AqKjjhET2k
- Avshalom 5y agoThe Economist was trying to sell those a while back https://news.ycombinator.com/item?id=14583273 https://news.ycombinator.com/item?id=14583273
- rundmc 5y agoThat was promoting Tontines rather than a Viagers. Seems like the sales effort was successful because the OECD recommends Tontines as the default pension systems now and Tontine Trust is launching Tontines in 27 countries in the next year. Disclosure: I'm the founder of https://tontine.com https://tontine.com
- neonate 5y agohttps://archive.is/GRsNr https://archive.is/GRsNr
- nathanvanfleet 5y agothank you
- deleted 5y ago[deleted]
- Zababa 5y agoI don't know if I would call the system morbid. This is a way for someone old to get a revenue until he no longer needs it. Often it's used to pay for a retirement home while the people buying the property live in it, thus making it like paying back a mortgage.
- paulgb 5y agoThe buyer is essentially making a financial bet that pays out if a stranger will die before a certain date. Even if it’s a mutually beneficial arrangement, that aspect feels very morbid to me.
- BenoitEssiambre 5y agoIsn't this the same as most pension plans and annuities?
- fredophile 5y agoYes, but with something like a pension plan you're pretty much always dealing with a pool of people on both sides of the transaction. In the situation in the article you can have a single person on each side so a particular individual is making a financial bet on another specific individual dying sooner rather than later.
- luma 5y agoI think the key problem is that it creates an incentive for the hopeful buyer to see if they can’t hurry the process up some.
- OldHand2018 5y agoI would imagine that if the death is even remotely suspicious, the beneficiary is going to be murder suspect #1.
- exporectomy 5y ago
- nraynaud 5y agoThere is this story that one of the oldest woman in the world had sold her house this way and that the buyer died before her.
- Zababa 5y agoIt is in the article, the woman was Jeanne Calment.
- sebmellen 5y agoAnd she was not just “one of the oldest,” but truly the oldest.
- erdewit 5y agoI've read recently that it may have been her daughter that took over her identity.
- sebmellen 5y agoFor those who may be interested in reading the article: https://www.smithsonianmag.com/smart-news/study-questions-age-worlds-oldest-woman-180971153/ https://www.smithsonianmag.com/smart-news/study-questions-ag....
- nraynaud 5y agowell, I said "one of" because the title tends to change hands over time.
- dredmorbius 5y agoAnd that there's an inherent conflict of interest instantly created: anyone who could plausibly claim to be the tenant would retain access to free housing for at least the duration of their own natural life, or the life of the deception, whichever comes first. Elsewhere I've read that scientific evidence has shown that a single condition has proved more effective than any other in reducing maximum reported human lifetimes: accurate demographic data.
- exporectomy 5y agoWhat I like about these schemes is they allow old people to enjoy the value of their property rather than enduring poverty just so their heirs can have an unearned pile of cash. So much value in the world is generated by hard working people then just dumped into the flaming rubbish pit of reckless children and spouses by inheritance. I wish inheritance wasn't the default way and you had to explicitly assign property in your will or otherwise for it to happen. The default would be that it goes to the state or something else not personally connected to the dead person.
- nyokodo 5y ago> The default would be that it goes to the state Because that's less of a flaming rubbish pit of recklessness than family?
- andyana 5y agoTo the right state, I think it is less of such a pit, yes.
- rkk3 5y agotell us when you've found one.
- andyana 5y agoI'll do that. In the meantime, are you going to keep doing nothing?
- zarathustreal 5y agoI for one will continue doing nothing, much better than taking steps in the wrong direction
- andyana 5y agoKeeping active is good for you. Any steps that aren't towards negativity are better than none at all, I reckon.
- nkozyra 5y agoIsn't this effectively what a reverse mortgage is in the US? You're given cash for your life up to the value of the home in exchange for the home when you pass
- mjh2539 5y agoIt's more like an inverse life estate.
- fredophile 5y agoI don't believe these stop at the value of your home. It's as long as you're alive. For most people that means they'll get less than the value of their home but I've heard of one case where a person ended up living for a long time and the financial instrument being sold multiple times as a result. It's like insurance, on average the insurance company makes money but they can lose a lot of it on some individuals.
- nly 5y agoThe property value presumably increases as well though, so there's potential the buyer will come out ahead with the annuity payments even if they pay more nominally than current value
- fredophile 5y agoWhy does the property value increase? Property values can and do decrease or move sideways for long periods of time. The property value and the payments are completely independent.
- dragonwriter 5y ago> Isn't this effectively what a reverse mortgage is in the US? There are many kinds of reverse mortgage plans, including ones that are functionally similar to this. (But there are also lump sum, fixed payment term, and other variations that aren't.) And even the ones that are functionally similar are technically different, since technically they are loans that come due at death secured by the property rather than a sale contract.
- joelhaus 5y agoWorked for two brilliant founders at a startup built around this concept, Irene Retirement. I'd still like to believe it can be institutionalized to address many of the risks noted here by other comments.
- elliekelly 5y agoThis reminds me of an enterprising(?) Rhode Island lawyer/CPA that I think the HN crowd especially will enjoy, however distasteful his business might have been: https://www.propublica.org/article/death-takes-a-policy-how-a-lawyer-exploited-the-fine-print https://www.propublica.org/article/death-takes-a-policy-how-...
- whall6 5y agoSo a reverse mortgage underwritten by an individual instead of a bank...
- dmurray 5y agoIt's a (reverse?) mortgage combined with an annuity combined with a forward sale. Mortgaging all of your property and buying an annuity with proceeds just seems like a sensible thing for anyone who is retired and doesn't expect to leave a significant estate. I don't really get why individuals are interested in the other side of the trade, though. Real estate is an annoyingly illiquid form of investment, so it's less attractive when you don't get to actually use the property.
- alisonkisk 5y agoThe other side is interested in the premium they charge for their trouble.
- kleton 5y agoI had guessed from the headline that it would be the tontine.
- deleted 5y ago[deleted]
- rebuilder 5y agoSo my first thought was, I can see why this would appeal to the seller, but why would a buyer prefer this to getting a loan? There must be some way this lower cost for the buyer. My second thought was, I'd rather not sell my house if it meant someone was now going to directly benefit from my untimely death.
- flal_ 5y agoIt's usually largely under "regular" market value. ( but that's still a bet over the life expectancy of the person ). Also you basically don't pay interests. And in some times you can use the property : the seller use the money to pay for a nursing home for example.
- vmception 5y agoReminds me of assassination markets, until I saw that the current owner gets a third of the cash up front, thats pretty different.
- gbronner 5y agoSame thing exists in NYC wrt to rent controlled coops
- nly 5y agoSounds just like the P2P variant of a Lifetime Mortgage, something many insurance companies offer here in the UK
- durnygbur 5y agoI wonder how this would work in places where mortgage exceeds one's lifespan. The numbers simply don't add up anymore.