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 ?
Guaranteed investment contracts (GICs) are fixed assets with no appreciation potential but which provide income.
* Insurance companies are concerned about (i) liquidity problems emanating from their guaranteed investment contracts and (ii) existing mortgages on properties having significant lease rollovers.
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.
Such investments are typically guaranteed investment contracts (GICs) and bank investment contracts (BICs).
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.
The report, which is based on 2012 data, found investors in their 20s have 11% of their assets in safe investments, including guaranteed investment contracts, stable value funds, money market funds and bonds.
* Synthetic guaranteed investment contracts that are fully benefit responsive.
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%).
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.
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.
([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.")

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