How Does Life Insurance On A Mortgage Work? 
Mortgage life insurance works very similar to a traditional life insurance policy - in short , a premium is paid to an insurance company and a death benefit is paid by the company to the beneficiary in the event the insured dies during the life of the policy . There is one key difference between traditional life insurance policies and mortgage life insurance - the structure of the policy death benefit.Traditional policies feature a level death benefit for the life of the policy along with level premiums for a specified term -LRB- or guaranteed forever -RRB- . Mortgage life insurance features level premiums , but have a decreasing death benefit - much like how a mortgage works -LRB- hence the name -RRB- . In today 's marketplace , the rates/premiums for a traditional policy are very competitive with mortgage insurance rates . 