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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
As in New York, regulators in other states are keeping their eyes on GICs, said Neil Vance, chairman of the NAIC's Life Liquidity Risk Working Group and managing actuary for the New Jersey Department of Banking and Insurance.
Eight investment options: company stock, magellan, growth, balanced, equity index, bonds, money market, fixed (GIC).
As noted above, GICs, too, are a popular option, But remember,they are only as safe as the companies that issue them.
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GICs and bank investment contracts (BICs) are especially popular with defined contribution (DC) plan sponsors and participants.
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Synthetic GICs can be structured as investment agreements (including derivatives) or insurance.
And they can do this while retaining the operational characteristics of traditional GICs that participants find so attractive.
Given the recent failures of some insurance companies and the rash of downgradings of others, why have GICs at all?
And, unlike the regulations proposed in 1987, the new proposal gives plan sponsors the responsibility and authority to select individual investment options, such as equities, corporate bonds, government securities, GICs, money market funds, real estate, and venture capital.