What is an annual yield?
All rates quoted by Western United Life Assurance Company are effective annual yields based on daily compounding and not interest rate. If principal and interest are left untouched during the year an effective annual yield and an interest rate generate the same dollar amount of interest. For example, if $10,000 was invested at an effective annual yield of 6% compounded daily, or at 6% simple interest, at the end of the year $600 in interest would have been added to the principal invested. Since the effective annual yield method compounds daily it requires that each day interest has to be earned on all interest that has been previously posted to the annuity. Therefore if interest is withdrawn during the year the effective annual yield method will result in less the $600 in interest being paid.
