What happens to the premium in an annual renewable level term policy?

In an annual renewable level term policy, the nature of the premium structure is such that while the premium remains level for the initial term, it will increase with each renewal. This is primarily because, as the insured ages, the risk for the insurer increases, leading to higher premiums. The premiums are typically calculated based on the insured's age at each renewal; thus, as the insured gets older, the cost of the policy rises.

This structure reflects the way insurance underwriting operates in relation to risk assessment over time. Insurance companies evaluate the probability of claims based on factors like age, health status, and other risk factors. Therefore, it is common for premiums in this type of policy to escalate yearly, reflecting the increased risk associated with aging.

The other options do not accurately depict the nature of premiums in an annual renewable level term policy, as they either suggest a decrease, no change, or infrequent adjustment of premiums, which is not characteristic of this type of term policy.