The death benefit may be used to pay off your outstanding mortgage loan on your home.
However, you choose the beneficiary of your mortgage life insurance policy when you purchase the plan. The lender does not have to be the beneficiary, it may be your spouse or family.
The beneficiary can use the proceeds from your mortgage life insurance policy for any purpose, including paying off or paying down the mortgage loan, or for any other purpose, such as, paying for living expenses, paying off credit cards, etc.
Mortgage death insurance is different from private mortgage insurance which insures the lender on your mortgage in case you die.
Learn more about mortgage death insurance and compare plans online.