There is a special type of life insurance policy available, known as a mortgage life insurance policy that will pay off your home in case of your demise. This type of coverage is required by some lenders, and typically pays directly to the company which holds the mortgage rather than to the person who owns the policy.
The primary purpose of mortgage life insurance is to protect the lender against losses in case the person who owns the property dies. Some mortgages even include such coverage in the monthly mortgage cost, linking the coverage into the mortgage in a decreasing premium that becomes lower as the home is paid off.
Another possibility is to purchase a term life insurance policy for the value of the home and the term of the mortgage. The advantage of this type of insurance is that the full value of the policy is paid to the named beneficiary, regardless of how much is left owing in the mortgage, providing the beneficiary with additional funds that can be used after the mortgage is paid off, such as making repairs to the property to make it less expensive to insure.
There is even a combination policy that combines term coverage with a decreasing premium and a decreasing payout value, almost exactly the way mortgage life insurance operates, payable to the heirs of the estate rather than the company holding the mortgage. This may be the least expensive method of providing mortgage coverage in case of death, but it does not provide additional funds for the heirs unless such money is included in the policy from the outset, such as having a $200,000 decreasing term policy when the actual home value is only $175,000.