How much coverage do you need?

Start with the loan

Use the current balance rather than the original amount, and take it from a statement rather than memory. If you have a second mortgage or a home equity line, include those.

Then add what a paid-off house doesn't cover

• Property taxes and homeowners insurance, which continue regardless
• Maintenance and repairs on a home someone still has to run
• Income replacement for the years your household would need it
• Childcare, which often increases when a parent dies
• Other debt — cars, cards, personal loans
• Final expenses and estate settlement costs

Then subtract what already exists

• Existing life insurance, including employer coverage — noting that it ends with the job
• Savings and investments genuinely available for this
• A surviving partner's income and earning capacity
• Survivor benefits from a pension or Social Security, where they apply

Level or decreasing

If you size coverage to the loan alone, a decreasing policy tracks it. If you size it to the family's whole need, level coverage is the right shape, because the rest of the need doesn't amortise.

Most households are better served by level coverage, since the non-mortgage costs persist and often grow.

Sanity checks

• Would the survivor actually want to stay in the home?
• Could they run it on their own income once the loan is gone?
• Does the term run at least as long as the mortgage?
• Does any policy you already own already cover part of this?