From the alien mind-bending horrors of Lovecraft, to the modern Hollywood slasher flick, Horror is a wide ranging genre that can be difficult to pull off correctly.
Most forms of Horror works best when characters are relatively weak compared to their adversaries. It is suggested that non-heroic characters are used, with most skills probably focused on everyday professions. For modern horror, a group of teenagers, academics or tourists can work well.
The main difference between horror games and 'standard' games in the same setting is that horror often includes rules for fright and insanity which can sometimes play quite a large role in the game.
In the type of horror depicted by writers such as Lovecraft, PCs will be totally overwhelmed by what they face, so how experienced or heroic they are shouldn't matter. It does make it a lot easier however if PCs are relatively low powered, so to this end a Mundane or Skilled campaign level is suggested. The latter level is well suited for researchers with an academic background, providing PCs with the ability to have a wide range of knowledge based skills if desired.
Many GMs prefer not to kill PCs without warning, allowing them to survive dangerous situations as long as they aren't completely stupid. Horror stories tend to work because there is a very real risk of sudden death. PCs should think twice about going off to explore a dark crypt or secret staircase alone. If PCs can't look after themselves, then the campaign will be short. If they are physically capable, then the campaign can turn out to be more action orientated than Horror.
In YAGS, Luck is a way of giving a character a second chance. It can be burnt to change death into survival, though it doesn't mean that the threat was completely negated. In a Horror setting, burning luck in this way may result in loss of sanity or some story event.
For truly deadly horror, then the GM may remove Luck altogether, or make it only available through some religious rituals or other supernatural intervention.
One common trait of many Horror RPGs is the concept of sanity, or the lack thereof. Though this isn't part of Modern Characters, YAGS does have the concept of Virtues, which are personality traits which can be used to resist base impulses. Virtues can be viewed as a saving throw against a character doing something the player doesn't want them to do.
For example, Bravery is a Virtue which can allow a character to stay and fight when they might prefer to run away. Sanity is a Virtue that can be used to prevent a character from doing something irrational and insane. Too much exposure to supernatural terror can reduce Sanity. However, insane characters can have a better chance of making use of the supernatural. A rational mind cannot so easily understand magic.
Sanity and other virtues will be explained in a further supplement. For most people they start at 4, and are similar to skills, being used with Will.