A contract (an insurance contract) involving retirement plans that is entered into by an investor and an insurance firm. The insurer guarantees a specific rate of return for the investor against a deposit (of a certain proportion) held for a specified period. The insurer also guarantees repayment of the principal amount of the deposit at the end of its term (usually from 1 t0 10 years).

This contract is very much similar to the classic certificate of deposit (CD) with one exception: guaranteed investment contracts (GICs) are issued by insurance firms, while CDs are usually sold by banks. GICs offer and guarantee high initial returns, but restrict the depositor’s (investor’s) withdrawal of funds before a certain number of years (or a lock-up period).

Banks usually issue similar instruments known as bank investment contracts (BICs) or bank deposit agreements (BDAs).