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 ?
7 in investments, which are primarily invested in various guaranteed investment contracts (GICs) and money market funds.
Among the 22 percent that are considering making changes, the report states, one in five plan to increase the allocation to traditional guaranteed investment contracts (GICs).
Unfortunately, many routinely mistake the latter for the former; recall Equitable's 1980s Guaranteed Investment Contracts (GICs) that virtually forced this insurer into its second failure in the 20th century when it had to be rescued by AXA, the big European insurer, in the early 1990s.
Survey respondents also predicted problems for life insurers who wrote guaranteed investment contracts or offered guaranteed benefits to their policyholders.
Guaranteed investment contracts are issued by most major insurance companies.
Seek investments that will provide income, such as corporate bonds, guaranteed investment contracts (GICs), and annuities.
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.
charged the company had breached its fiduciary duties under ERISA by investing in guaranteed investment contracts (GICs) offered by Executive Life Insurance Co.
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.
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.

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