It stands for guaranteed investment contract; 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: 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).