Bullet GIC

DEFINITION of 'Bullet GIC'

A type of guaranteed investment contract where a single payment is made to the account and where both the principal and interest are returned to the payor at some date in the future. A bullet GIC, or bullet guaranteed investment contract (BGIC), provides investors with a typically low-risk means of achieving a guaranteed principal repayment, plus interest. These contracts are often offered by insurance companies.

BREAKING DOWN 'Bullet GIC'

With a guaranteed investment contract, an insurance company accepts a particular amount of money and agrees to return the money, along with interest, at an agreed-upon date in the future, typically ranging between one and 15 years. The interest can be paid at regular intervals or held to the contract's maturity. Bullet GICs are typically designed to accept a single deposit (usually $100,000 or greater) for a particular time period (generally between three and seven years). Bullet GICs are often used in defined benefit plans because they are compatible with the timing of plan contributions.