Guaranteed investment contract

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Guaranteed investment contract (GIC)

 A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment.

Guaranteed Investment Contract

A pension plan purchased through a bank or an insurance company for a lump sum in which the principal is guaranteed by the issuer. One may receive payments from a GIC either in installments or as a lump sum after retirement. A GIC provides the pensioner with a small interest rate that is not guaranteed, but the fact that the principal is guaranteed makes it a relatively low-risk investment.

guaranteed investment contract (GIC)

An investment product sold by life insurance companies that guarantees a return for a specific length of time on a large, lump-sum premium. Most GICs are funded by transfers from some other pension plan. The return of principal is dependent on the insurance company's ability to satisfy its obligation.

Guaranteed investment contract (GIC).

A guaranteed investment contract, or GIC (pronounced gick), promises to preserve your principal and to provide a fixed rate of return when you begin to withdraw from the contract, typically after you retire.

You can invest in a GIC through a salary reduction plan, such as a 401(k) or 403(b) sponsored by your employer, provided that investment option is offered.

Because of their fixed rates, GICs are vulnerable to inflation. And you may have to pay a penalty if you decide to change from a GIC to a different investment.

Insurance companies that offer GICs assume the risk that the rate they earn on their investments will outperform the rates they've guaranteed on the GICs.

References in periodicals archive ?
Survey respondents also predicted problems for life insurers who wrote guaranteed investment contracts or offered guaranteed benefits to their policyholders.
Mainstream ideas include stable value funds that have short- and medium-term bonds, guaranteed investment contracts and insurance to keep the fund's net-asset value stable.
According to the Financial Accounting Standards Board, questions have been raised regarding proper accounting for such contracts as insurance contracts, guaranteed investment contracts and synthetic GICs since issuance of its Statement No.
The changes give local governments the ability to contract with outside investment firms, use guaranteed investment contracts that allow for a specific rate of return on investment capital, and municipalities with fewer than five full-time employees now can decrease their training requirements.
ARM Financial Group provides annuities and maintains guaranteed investment contracts through its insurance subsidiaries, Integrity Life Insurance Company and National Integrity Life Insurance Company.
Among the several investment choices in the plan were guaranteed investment contracts issued by the Executive Life Insurance Co.
Traditional guaranteed investment contracts are the cornerstone of many a pension-fund management strategy.
The Financial Accounting Standards Board issued exposure drafts on fair value for guaranteed investment contracts (GICs) and on accounting for reinsurance contracts as well as an interpretation about offsetting amounts related to specific contracts.
Insurance companies are concerned about (i) liquidity problems emanating from their guaranteed investment contracts and (ii) existing mortgages on properties having significant lease rollovers.
Are there any problems associated with avoiding the complexity of the arbitrage rebate calculations by investing bond proceeds in guaranteed investment contracts (GICs)?
The lawsuit alleges that financial companies and brokers agreed among themselves to give cities artificially low bids for Guaranteed Investment Contracts, which cities use to earn interest on municipal bond funds.
Regulators weigh the liquidity risks in guaranteed investment contracts and similar instruments after General American's ordeal.

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