As for your life insurance, I believe the individual is insured for what they intended to insure. If you took out a policy when you closed that some insurers call mortgage insurance (term insurance), it most likely was for the amount of your loan and insured you and whomever else was on the note. You would have to look at the policy and see how it was worded.
I'll give them all thumbs up for you, feel free to add one of your own. :)