Yearly Renewable Term (YRT)

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Yearly Renewable Term (YRT): What It Is and How It Works

Yearly Renewable Term (YRT) is a term life insurance policy that provides one year of coverage at a time. The death benefit remains the same year to year, but the premium is recalculated annually based on the insured’s current age. YRT effectively functions as a series of consecutive one‑year policies with no additional medical underwriting for each renewal (until renewability ends or the policy is converted).

Key points

  • YRT covers one year at a time and automatically renews if premiums are paid.
  • Premiums increase each year to reflect higher mortality risk as the insured ages.
  • Renewals typically do not require a new medical exam, but they do raise the premium.
  • Many YRT policies can be converted to level term or permanent coverage without further medical underwriting.
  • Over many years, total premiums paid for YRT can exceed those for level‑term or permanent policies.

How YRT premiums are set

Insurers use actuarial tables and risk factors (age, health, sometimes gender and tobacco use) to set a premium schedule. Most policies include a “schedule of premiums” showing the maximum premium for each renewal year. When the policy renews, the insurer charges the premium corresponding to the insured’s attained age.

Differences from other life insurance types

  • Level term: Premiums stay the same for a fixed term (e.g., 10, 15, 20 years). YRT premiums change every year.
  • Renewable term (multi‑year): Some renewable policies lock a single premium for a multi‑year block (e.g., 10 years) then reset. YRT resets annually.
  • Whole/permanent life: These policies typically carry fixed or predictable premiums and build cash value; YRT does not build cash value and has rising premiums.

Who YRT suits

  • Young, healthy adults who want low initial cost and flexibility.
  • People needing short‑term coverage (e.g., 1–5 years) during a transitional period — job change, short‑term loans, awaiting improved health before applying for long‑term coverage.
  • Those who value the ability to renew without new medical exams.

Advantages

  • Low starting premium compared with many other products.
  • Flexible short‑term protection and easy renewability without medical underwriting.
  • Conversion options often available to switch to level‑term or permanent policies.

Disadvantages

  • Annual premium increases can make long‑term ownership expensive.
  • Renewability may stop at a certain age (varies by state and insurer).
  • No cash value accumulation.

Practical considerations

  • Review the policy’s schedule of premiums to estimate future costs.
  • Check conversion and renewability provisions (maximum renewal age, conversion deadlines).
  • Compare total expected costs of YRT versus level‑term and permanent policies for your expected coverage horizon.

Bottom line

YRT can be an economical and flexible option for short‑term life insurance needs or for younger buyers who want low initial premiums and the option to renew without re‑underwriting. For longer‑term protection, a level‑term or permanent policy will often be more cost‑effective. Speak with a licensed life insurance agent to evaluate which structure best matches your timeline, budget, and health situation.