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 ?
The plaintiffs pointed to guaranteed investment contracts, or GICs, as an example.
The programs assets are composed of $321.3 million in program loans and $119.7 in investments, which are primarily invested in various guaranteed investment contracts (GICs) and money market funds.
Collective investment trusts held 21% of assets, guaranteed investment contracts held 12%, separate accounts held 3%, and the remaining 18% was invested in individual stocks (including company stock), bonds, brokerage, and other investments.
* Documentation pertaining to any investment of bond proceeds, including the purchase and sale of securities, SLG subscriptions, yield calculations for each class of investments, investment income received from the investment of proceeds, guaranteed investment contracts, and rebate calculations and reports;
The addition aims to preserve principal and generate high levels of current income by investing in guaranteed investment contracts, money market mutual funds and other stable value products.
The fund is a stable value fund aimed at preserving principal and generating high levels of current income by investing in guaranteed investment contracts, money market mutual funds and other stable value products.
The FSOC has shown that synthetic guaranteed investment contracts and variable annuity risks make it skittish.
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).
"JPMorgan Chase announced today that it has agreed to a settlement with the Internal Revenue Service under which JPMorgan Chase will pay $50 million for certain regulatory violations of the Internal Revenue Code committed in connection with JPMorgan Chase's role in providing or bidding on guaranteed investment contracts, swaps and other contracts with the issuers of municipal bonds or with entities which borrowed the proceeds of such bonds from the issuer thereof or otherwise were the beneficiaries of such bonds.
According to the Department of Justice, Kanefsky's firm was hired by municipal governments to act as their broker and conduct competitive bidding processes for the award of investment agreements, known as guaranteed investment contracts, or GICs.
The one exception to the requirement of reporting derivative instruments at fair value relates to fully benefit-responsive synthetic guaranteed investment contracts (SGIC).
Survey respondents also predicted problems for life insurers who wrote guaranteed investment contracts or offered guaranteed benefits to their policyholders.

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