Guaranteed Investment Contract
What Does Guaranteed Investment Contract Mean?
A Guaranteed Investment Contract (GIC) is a legal agreement between a person or entity and an insurance company wherein the former provides financial assets to the latter with the assurance that those assets will be returned and will yield a profit based on a fixed schedule.
Insuranceopedia Explains Guaranteed Investment Contract
A Guaranteed Investment Contract is considered a stable value investment, meaning that it is generally free of risk. The assets that are given to the contract issuer (usually an insurance company) who is going to invest them will be returned with profit and even interest on a date specified in the GIC. The issuer also assures the investor by showing its assets and history of successful GIC’s as well as the accounts that will reflect the direction of the investment and its accrued interests.
The yield from GIC’s is not high compared to stocks and bonds because of its financially conservative nature. But the risks, if there are any, are much lower.