Final answer:
I would recommend Michael to consider purchasing term life insurance to cover the loan amount. Term life insurance provides coverage for a specific period of time and is typically more affordable than other types of life insurance. It does not have a cash value component but provides a death benefit that can be used to pay off the loan in the event of Michael's death.
Step-by-step explanation:
I would recommend Michael to consider purchasing term life insurance to cover the loan amount. Term life insurance provides coverage for a specific period of time, such as 10, 15, or 20 years, and is typically more affordable than other types of life insurance. Since Michael wants the most economical policy, term life insurance would be a suitable choice.
Term life insurance does not have a cash value component like whole life insurance or universal life insurance. However, it provides a death benefit that can be used to pay off the loan in the event of Michael's death, ensuring that his wife can enjoy the car without the burden of the loan.
It's important for Michael to carefully consider the loan term and choose a term life insurance policy that aligns with the loan duration to ensure sufficient coverage.