Investment instruments issued by insurance companies to large investors such as pension funds with guaranteed principal and interest from one to five years.

A pension plan funding vehicle in which an insurer accepts a single deposit from a plan sponsor for a specified period of time, such as five years, and holds the deposit at a specified rate of interest. At the end of the period, the deposited funds, including accumulated interest, are returned to the plan sponsor, who can reinvest the plan assets with the insurer or with another party. Also called a guaranteed income contract or a guaranteed interest contract.

An agreement under which an investor, usually a pension fund, places assets with an insurance company, which guarantees the return of principal plus payment of interest at a stipulated rate. While many variables can enter into the agreement, such as the amounts to be deposited and the duration of the contract, all GICs require that the principal be repaid along with the guaranteed interest credited on the deposits. GICs come in many forms. The simplest GICs are "bullet" contracts under which the funds are returned in a lump sum. Other contracts allow for payouts over time. GICs also may differ according to deposit methods (lump sum or "window" periods) and maturity (ranging from one to ten years). Additionally, in recent years, companies have offered indexed or floating rate GICs in addition to the fixed-rate instruments. The primary noninsurance competition for GICs is the Bank Investment Contract (BIC), which is particularly popular for maturities of less than three years.

(GIC) A retirement plan funding vehicle, under which the insurer accepts a single deposit from the plan sponsor and guarantees to pay a specific interest rate on the deposited funds for a specific time period. Sometimes called a guaranteed income contract or a guaranteed interest contract.

(GIC) A contract in which investors, usually corporate profit sharing or pension plans, deposit money with insurance companies in exchange for a guaranteed rate of interest in addition to the return of principal originally invested.

A contract under which the Plan invests money (principal) with an insurance company or other financial institution. The financial institution promises to repay principal in full plus accrued interest on a specific date in the future, typically after a period of one to five years. The term "guaranteed" refers only to the issuerâ€(tm)s promise to repay, and not to any type of government or any other guarantee.

A GIC (pronounced gick) is an insurance company product designed to preserve your principal and to provide a fixed rate of return. You may invest in a GIC through an employer sponsored salary reduction plan, such as a 401(k) or 403(b), if it is one of the investment options offered.

A book value investment vehicle issued by an insurance company, backed by the issuer's general account.

A contract in which the issuer makes a commitment to provide interest on invested funds for a period of time. Such contracts are generally issued by insurance companies, and have been used extensively in 401(k) retirement plans.

A contract issued and backed by the assets of the issuing corporation, such as an insurance company or other financial institution that offers a predetermined or set return.

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.

An agreement between an insurance company and a corporate profit-sharing or pension plan that guarantees a specific rate of return over the time span of the agreement.

A group annuity contract or funding agreement issued by an insurer that promises to pay a fixed rate of interest and to return the investor's principal after a specified term, usually one to five years. Note: "Guaranteed" does not mean return of principal is guaranteed. A GIC is guaranteed only by the issuing insurer, not by the government or the retirement plan.

a contract between an insurance company and an individual investor. The amount a client invests in a GIC is guaranteed by the insurance company, as well as the rate of return, which is fixed (and this return is about 0.5 to 1.5 percent higher than a comparable certificate of deposit).

A pure investment product in which a life company agrees, for a single premium, to pay the principal amount of a predetermined annual crediting (interest) rate over the life of the investment, all of which is paid at the maturity date.

An investment offered by an insurance company that promises preservation of principal and a fixed rate of return. Many defined contribution plans, such as 401(k) and 403(b) plans, offer GICs as retirement options to employees. Although the insurance company takes all market, credit and interest rate risks on the investment portfolio, it can profit if its returns exceed the guaranteed amount. Only the insurance company backs the guarantee, not any government agency, so if the insurer fails, it is possible there could be a default on the contract. But overall GICs offer a stable way to achieve a fixed rate of return. BACK TO TOP

A retirement plan funding vehicle under which the insurer accepts a single deposit from the plan sponsor and guarantees to pay a specified interest rate on the funds deposited during a specified time period. Also called a guaranteed income contract or a guaranteed interest contract.

A contract whereby the insurance company accepts a specified amount of money from a qualified retirement plan and agrees to refund the principal and interest at a fixed date, 1 to 15 years in the future. Interest is guaranteed for the life of the contract.

A guaranteed investment contract ("GIC") is a contract that guarantees repayment of principal and a fixed or floating interest rate for a predetermined period of time. Guaranteed investment contracts are typically issued by life insurance companies and marketed to institutions qualified for favorable tax status under the Internal Revenue Code (for example, 401(k) plans). A GIC is used primarily as a vehicle that yields a higher return than a savings account or U.S.