What is a potential drawback of selecting Yearly Renewable Term (YRT) as a mortality costing option?

Selecting Yearly Renewable Term (YRT) as a mortality costing option can lead to significantly higher costs in later years. This is primarily due to the nature of how YRT policies are structured. With YRT, premiums are based on the insured's age each year, meaning that as the insured gets older, the likelihood of mortality increases. Consequently, the cost of the term insurance rises annually to reflect this increased risk.

As people age, especially beyond middle age, the premiums can escalate quickly, resulting in a considerable financial burden for the policyholder in the later years. This aspect makes YRT less predictable in terms of long-term financial planning compared to other options that might feature level premiums or guaranteed costs.

In contrast, fixed costs for the policy duration would indicate predictability in expenses, which is not a characteristic of YRT. Significant decreases in costs over time contradict the fundamental premise of YRT, as premiums tend to rise rather than fall. Lastly, the absence of investment returns may be a feature of YRT, but it does not encompass the primary drawback of escalating costs associated with aging.