The total amount currently covered under the policy is paid out. The type of assignment that is taken over the policy by the lenders only entitles them to take what they are owed, any surplus is paid out to your next of kin. The mortgage protection policy does not go down exactly in line with your mortgage, when you effect the policy a certain % rate is selected that will cover up to that %. In general, the selections on such policies is 0 - 5%, 6 - 9%, 9- 12%. The higher % chosen the dearer the policy.