Guaranteed Investment Contract (GIC)

An obligation issued by an insurance company in return for a payment by an investor. The terms of GICs vary greatly, but they typically offer a relatively high initial return guarantee and impose some restrictions on the investor's ability to withdraw funds. A similar contract offered by a bank is called a Bank Investment Contract (BIC) or Bank Deposit Agreement (BDA). The failure of several insurance companies which were active issuers of GICs has led investors and marketers to look for synthetic GICs which offer a similar return pattern with lower risk. See Synthetic Guaranteed Investment Contract (Synthetic GIC), Participating Account.

Glossary * G