Tontines are like peer-to-peer life-annuities where there is no central sponsor guaranteeing the payout.
Instead, individuals pay into a common pool of money and receive a monthly payout based upon robust actuarial formulae.
The payout is based on the size of their contribution, the performance of the investments made with the pooled money in the Tontine and the longevity of the pool members.
Once invested, sums contributed to the Tontine cannot be withdrawn however payments will continue for the entire life of the member even if they live up to 120 years old.
Typically the investor would receive back their principle within a number of years and then subsequently continue to receive income for the rest of their life.
When a member passes away, their entitlements lapse and are in essence divided up among the surviving members on an actuarially fair basis thereby keeping the full capital for the members.