It's best to insure your home loan, so the insurance company steps in and pays the loan, securing your dependents and your mortgaged house.
A home loan insurance covers the balance of the home loan to be paid in case there is a death of the person taking the home loan. Housing finance companies and banks always coerce applicants taking a home loan to get an insurance cover because it acts as a surety. They may bundle it with the loan amount. Also read tips to remember before taking a home loan
But remember that the home loan insurance will only cover your home loan. This means that your family can be in a mess, even if they own the home, after the loan company pays off your home loan. Hence, it's important to also take a term insurance in case you do not have one.
But, many analysts argue that in place of a home insurance, you could directly take a higher term insurance and cover the home loan in case of any eventuality. That is also a fair argument.