What? Mortgage Insurance doesn't cover death, it covers the lender in case the owner goes in to foreclosure on the property. It allows the lender to give the mortgage without the borrower putting 20% down.
So lets say Fez paid 200K for his house, foreclosed and still had 190k left on his mortgage. Lender sells property for 180k. Mortgage Insurance pays back 10k to lender plus appropriate expenses. What usually happens is Fez gets pissed b/c he can't keep the house, rips out the cabinets, punches holes in the walls, deficates on the carpets and generally destroys the interior of the home. Then the lender can't get more than say 150k for the house so the mortgage insurance kicks in after the lender sells it and makes up a big chunk of change.
Foreclosure is a pain in the rear. They are the biggest waste of time and money for both the lender and the borrower. Sell your house if you are ANYWHERE near going in to it. And don't take out a loan for more than 100% of the value of your property. You are better off using a credit card.