Final answer:
Mortgage life insurance is a type of life insurance that pays off a mortgage in the event of the policyholder's death. It ensures that the policyholder's family will not be burdened with a mortgage after their demise, and represents a specific form of financial protection.
Step-by-step explanation:
Insurance designed to pay off a mortgage in the event of the policyholder's death is a type of life insurance specifically called mortgage life insurance or mortgage protection insurance. This policy works by making regular payments to an insurance entity, which in turn promises to pay off the remaining mortgage balance upon the death of the insured, thereby ensuring that the policyholder's family members will not face the burden of the home loan during an already difficult time. However, it's also important to consider the concept of moral hazard, where the existence of this insurance could result in individuals being less concerned about the event of death as it pertains to their financial obligations.