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.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

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References in periodicals archive

Guaranteed investment contracts (GICs) are fixed assets with no appreciation potential but which provide income.

Smart retirement planning: solid planning and the right safety net will ensure that you enjoy your golden years

A16, "Synthetic Guaranteed Investment Contracts" which was cleared in Mar.

FASB issues statement 133 implementation guidance for employee benefit plan contracts. (accounting & auditing news)

* Insurance companies are concerned about (i) liquidity problems emanating from their guaranteed investment contracts and (ii) existing mortgages on properties having significant lease rollovers.

Real value key to recovery in 90's

First Executive's greatest growth didn't come from traditional, or even semitraditional, life insurance product but from single-pay products like annuities and Guaranteed Investment Contracts, which involve only one large premium payment up front.

The Fall of First Executive: The House That Fred Carr Built

Such investments are typically guaranteed investment contracts (GICs) and bank investment contracts (BICs).

Stability is key to Morley's strategy

Some of these companies were using guaranteed investment contracts, that is, the promises life insurance companies make to provide a specific yield over time typically to a pension fund, as the source for acquiring bonds as well as placing mortgages.

Born again conservatives

* Synthetic guaranteed investment contracts that are fully benefit responsive.

GASB proposes new guidance on measurement

The 2012 PLANSPONSOR Defined Contribution (DC) Survey asked sponsors what was used as their plan's automatic enrollment default investment (see "Default Investment Options in Auto-enrollment Plans," above, right); 18% of sponsors (see "Use of Non-QDIA Investments - by Asset Size," at left) have non-QDIA investments: stable value funds and guaranteed investment contracts (GICs) (5.7%), money market funds (6.9%) and other (5.4%).

Safe Harbor Investments

In reality, most synthetic stable value products use three or more synthetic GICs (guaranteed investment contracts), so investors' risk exposure to the insurance company or bank is even less.

Stable Value - Slow and Steady

Best # 59197) confirmed last month that it has received subpoenas from Florida and Connecticut in connection with a multistate investigation of alleged bid-rigging in the sale of guaranteed investment contracts to municipalities.

Genworth joins growing list of GIC probe-linked defendants

([dagger]) Includes guaranteed investment contracts (GlCs), pooled GlCs, separate account GlCs, synthetic GlCs, traditional bank investment contracts and short-term investment funds (Although GlCs have come under fire in the past year, Buck's Richard Koski said he did not expect this to have an appreciable impact on the percentage of 401 (k) plan sponsors that will offer GlCs as an investment option "Sponsors want to have a fixed-income type of vehicle under their plans and these are still the most common of this type The problem cases are still few and far between; sponsors will be more selective in picking their providers.")

Sponsors offer more 401(k) investment choices