Advanced Diploma of Financial Planning (ADFP) Practice Test

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Prepare for the Advanced Diploma of Financial Planning Test. Study with interactive quizzes and comprehensive questions, each offering detailed explanations and insights. Gear up for success!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Which type of life insurance pays a death benefit only if the insured dies within a specified period?

Whole life insurance
Term life insurance
Universal life insurance
Variable life insurance

The correct answer is: Term life insurance

Term life insurance is designed to provide coverage for a specific duration, which is why it pays out a death benefit only if the insured dies within that predetermined period. This type of insurance is often more affordable than permanent policies because it does not accumulate cash value and is intended purely for providing financial protection during the specified term. Whole life insurance, universal life insurance, and variable life insurance are forms of permanent insurance, which means they cover the insured for their entire lifetime as long as premiums are paid. These types generally include a savings or investment component that builds cash value over time, unlike term life insurance. Therefore, the main distinction lies in the limited duration of coverage that term life offers, aligning with the question's focus on conditional death benefits within a specific time frame.