I remember Final Fantasy VI let you keep your XP (and halved your money) when you died. That was nice, it made it feel less like "Oh, the last three hours were a COMPLETE WASTE OF FUCKING TIME." Glad the trend of "instantly obliterate your last few hours of play" is a fading trend in RPGs.
I'm pretty sure Final Fantasy 6 displayed a game over screen and sent you back to the start screen when your party died, except for the final boss fight where you can go through all your dudes.
Yeah I played through 6 like 3 times and everytime I died I lost all the progress since my last save.
You lose all your progress, but you keep all your XP. It shows your lead character on a black screen going into a "weakened" state while it plays the sad music, but it doesn't go back to the title screen, it just boots you straight back to your last save. Where you still have ALL your XP (but half your gold and none of your progress).
I'm half tempted to download the ROM just to verify this, because I quite recall losing everything upon dying.
Dragon Quest, on the other hand, always let you keep your EXP and Inventory but took half your money (which you could protect by putting it in the bank).
I am 99% sure the XP stays intact (I know with total certainty the gold halves). I remember because I rented it and couldn't get past Vargas (I didn't realize you were supposed to use Sabin's "Pummel") and my level kept increasing, but I couldn't beat him...