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guaranteed investment contract (GIC)

Mechanism of funding for a retirement plan in which an insurance company accepts a single deposit from a sponsor of the plan for a certain time period and retains the deposit at a specific interest rate. At the end of the time period the deposited funds, with interest, are returned to the plan sponsor who may reinvest the plan assets with the insurance company or another party. Also called guaranteed income contract or guaranteed interest contract .

Guaranteed issue

1. Provision in an employer’s health plan that acceptance and coverage be offered to any employee of the company. 2. Legal requirement that an insurance company accept all individuals who apply for coverage. 3. Insurance coverage offered on a one-time basis that does not require that the individual give evidence of insurability. In some plans, it guarantees renewal of the coverage as long as the applicant pays the premium.

Guaranteed issue rights

Rights an individual has in certain situations when insurance companies are required by law to sell or offer a Medigap policy. In such situations, an insurance company cannot deny insurance coverage or place conditions on a policy but must cover the individual for all preexisting conditions and cannot charge more for a policy because of past or present health problems. Also called Medigap protections .

Guaranteed Minimum Pension (GMP)

Minimum pension that a defined benefit scheme must provide as a condition of contracting out for pre-6 April 1997 service. GMP does not apply to money purchase contracted out schemes as the granting of protected rights is the relevant contracting out provision. Where all service is post-5 April 1997 the members’ benefits are protected by limited price indexation (LPI). Where service is pre- and post-5 April 1997, benefits are affected by GMP and LPI respectively.

Guaranteed period

Mininimum period for which the payment of a pension or annuity is guaranteed regardless of the annuitant’s earlier death. If premature death occurs the insurer may be willing to pay the net present value of the annuity payments as a lump sum.

Guaranteed renewable

Clause in an insurance policy that means the insurance company must renew the policy as long as premium payments are made by the insured. However, the premium may be increased when it is renewed if it raises premiums for a particular class such as everyone in a geographic area with the same type of policy. These policies may have age limits of 60, 65, or 70 years or may be renewable for life.
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This term applies to a number of different types of health insurance. Guaranteed renewable policies cannot be canceled by the insurance company as long as premiums are paid on time. Premiums may be increase, however, as long as premiums on all similar policies for the company are also increased.

Guaranteed renewable contract

Insurance policy that means the insured has the right to have the policy in force as long as he or she pays the premiums. However, the insurance company may increase the premium rate when the policy is renewed. These policies may have age limits of 60, 65, or 70 years or may be renewable for life. Also called guaranteed renewable policy .