Method one: months of payments
The smaller target is your monthly payment multiplied by the number of months you'd want covered. Twelve months is the common starting point; twenty-four if there are children at home or one income. The benefit gives the family time: to grieve, to settle the estate, to decide whether to stay, without the mortgage forcing the pace.
Method two: the whole balance
The larger target is what you owe. The benefit clears the loan, and whoever stays owns the house outright. It costs more, and it is the right answer for a household where the survivor's income could never carry the payment alone.
Worked example
| Target | Arithmetic | Coverage |
|---|---|---|
| 12 months of payments | $1,800 × 12 | $21,600 |
| 18 months | $1,800 × 18 | $32,400 |
| 24 months | $1,800 × 24 | $43,200 |
| The whole balance | Remaining principal | $250,000 |
The gap between the small targets and the large one is the whole conversation. A policy for two years of payments is inexpensive and buys time. A policy for the balance costs several times more and buys a paid-off house. Which one fits depends on what the survivor could carry, not on what sounds safest.
What the agent adjusts
- Coverage you already have, especially through work, and whether it would survive a job change.
- The survivor's income, and whether it would continue.
- Whether the family would keep the house at all. Sometimes the honest plan is to sell, and the coverage only needs to bridge to the sale.
- The years left on the loan, which sets the term, and whether a decreasing benefit would do.
None of this requires an exam or a commitment. It requires twenty minutes with a mortgage statement and someone who has done it before.