Colorado Life Producer License Practice Test

The type of policy that pays a death benefit if the insured dies during the specified premium paying period is a level term policy. A level term policy provides coverage for a set period of time, in this case, 20 years, during which premiums remain constant, and a death benefit is paid if the insured dies within that time frame.

In contrast, whole life policies offer lifelong coverage with a cash value component, making them different from term policies, which provide coverage only for a limited duration. Universal life policies are flexible permanent policies that combine a death benefit with a cash value component that can fluctuate. Variable life policies also offer a death benefit and cash value but allow policyholders to invest the cash value in separate accounts, which can increase or decrease based on market performance.

Thus, the key characteristic of the level term policy—offering a death benefit for a specific term while the policy is in force—is what distinguishes it as the correct answer in this scenario.